Fed raises rates despite economy performance, Mark Zandi argues

Fed raises rates despite economy performance, Mark Zandi argues
Fed rate hike may assert independence

Mark Zandi, chief economist at Moody's Analytics, questions the Federal Reserve's recent decision to hike interest rates, stating that economic performance does not support such a move.

He suggests the rate increase may be intended to assert the central bank's independence following the appointment of a new chair. Zandi notes that while U.S. President Donald Trump has publicly called for lower rates, the Federal Open Market Committee (FOMC) instead opted for a rate hike.

Earlier this year, Zandi warned that the risk of a Federal Reserve policy mistake was rising as markets anticipated further rate hikes despite 2% U.S. GDP growth (link). He has also linked long-term U.S. interest rate increases to geopolitical events, noting higher levels not seen since the financial crisis (link). Both comments come amid ongoing discussions about the central bank’s policy direction.

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