Aftermath of Fed Rate Hike

Abstract

The dawn is now in the world. At last, the Fed has raised the interest rate to prod the economy and to pacify the President! Milton Friedman, the pioneering monetarist and a Nobel Laureate from the University of Chicago once told that if you print money, it is a policy. If you do not print money, it is also a policy. To make an analogy, so if you raise the interest rate it is a policy and if you do not raise the interest rate, it is also a policy. The most important podium to look for in this policy revision is the context; the environment and the economic fundamentals on which you change your decision or strict to static situation. It is not a relevant issue or question whether Janet Yellen who was appointed by Barack Obama and whose next tenure is in the regime of Donald Trump should flip on the movement of wind or should her decision be based on the sound working principle of the Federal Open Market Committee [FOMC] on interest rate change. There are many historical anecdotes on the issue of policy changes that slide to favor a party or group on the event of an election campaign but the world seldom see changes on any of this fundamental issues in the developed world. Even in many countries of the developing world, even the changes are molded through a fair and impartial institutional set up; the integrity of that institution was never put on trial. You may also consider the static state of Alan Greenspan on lowering the interest rate when the economy was in recession in late eighties despite the repeated request of the President H. W. Bush who appointed Alan Greenspan but he disappointed the President in his second term in office.