Slowly but surely the Federal Reserve seems determined to pop the growing stock market bubble which has seen the Dow Jones Industrial Average move to record highs. The transcript of the last Fed meeting between 31 January and 1 February has seemingly cast doubt on the intentions of the president Donald Trump. This is not the first time that the Fed has attempted to reduce expectations but there does seem to be a direct conflict between comments from the Fed and policy intentions announced by Donald Trump. So, why is the Feds Janet Yellen trying to pop the stock market bubble? Read full article
They had to move off of zero interest rates and back to normalcy sooner or later. Many of us think the fed kept rates down too low for too long. Some believe the fed has become politicized, and that Yellen may have been trying to postpone this transition as long as possible, so as to try to prolong artificial stock and real estate market bubbles during Obama's entire 2 terms. I think that a decrease in the regulatory environment and a drop in the corporate tax rate can help make for a smoother transition to a more normalized fed policy.
I agree, what they take away with increased base rates they will need to give back in some other way - increased investment in infrastructure and/or tax cuts - in order for the move to "normal" base rates levels to be as smooth as possible.
