Is the Fed Truly Apolitical?


The U.S. Federal Reserve (Fed) is an independent government agency and Jerome Powell, its chair, said recently in an interview with 60 Minutes that “we do not consider politics in our decisions. We never do and we never will.” But not everyone believes that to be entirely true, including John Christofilos, Chief Trading Officer at AGF Investments.

In the latest episode of Inside Perspectives, AGF’s investment podcast, Christofilos said he’s not convinced the Fed simply ignores the political climate in the U.S. when making policy decisions, particularly during a presidential election year.  

“Anytime I hear a Fed official say, ‘we don’t consider politics in our decisions,’ innately it makes me believe they consider politics in their decisions,” he said as part of a broader discussion on the potential market implications of the election in November with Kevin McCreadie, AGF’s CEO and Chief Investment Officer and Greg Valliere, our Chief U.S. Policy Strategist.

Granted, that is not to say the Fed is trying to manipulate the election results through its actions. Indeed, it is one thing for the Fed to be influenced by government policy, especially as it relates to the broader economy, but another thing entirely to suggest the central bank is taking an active hand in choosing the next U.S. president.

“I don’t buy the conspiracy that they’re sitting in the back room saying they want to engineer an outcome,” said McCreadie.

Either way, McCreadie and his interlocuters agreed that the ongoing debate surrounding the Fed’s political impartiality leaves it vulnerable to heavy scrutiny at a time when it is trying to navigate a soft landing for the economy.

“Whatever they do now, it’s not going to be enough for anybody,” he said.

Listen to the full audio podcast now: Biden Versus Trump II: An Investor’s Guide to the U.S. Election

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.

Commentary and data sourced from Bloomberg, Reuters and other news sources unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of Feb 29, 2024 and are not intended to be comprehensive investment advice applicable to the circumstances of the individual. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained here.

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Related: The Electoral Narrative Has Suddenly Changed