The outlook for fed policy next year will depend not only on the economic outlook, but also whether a new Trump-appointed Fed Chair, from May, can convince his colleagues that rates should be cut below neutral or, alternatively, that neutral is lower. Media reports this week indicated that current director of President Trump’s National Economic Council, Kevin Hassett, is now the favourite to be nominated. We suspect that, while he would pay lip service to Trump’s demands for lower rates, we don’t think he would represent a genuine danger to the Fed’s independence.
Happy Thanksgiving.
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