Janet Yellen, President Obama's nominee to succeed Ben Bernanke as Federal Reserve chairman, smiles as she finishes testifying at her confirmation hearing before the Senate Banking Committee on Capitol Hill in Washington. A Senate panel on Thursday advanced Yellen's nomination to lead the Federal Reserve, setting up a final vote in the full Senate after lawmakers return from a two-week Thanksgiving break. (AP Photo/J. Scott Applewhite, File)
Fed Chair Janet Yellen and the F.O.M.C. decided at their September meeting to leave the federal funds interest rate alone at between .25%-.50% but left open the chance of an increase before the end of the year, possibly December. This decision by the Fed committee had a positive affect on U.S. markets as all three major indices finished with substantial gains. One strategist for JPMorgan-Chase said that the Fed is causing damage to the American economy with it’s inactivity.
David Kelly, chief global strategist at JPMorgan Funds told CNBC’s “Power Lunch” that-
“The Federal Reserve is doing long-term harm to the economy by not hiking interest rates. The economy has hit every target they have set. And we’ve got an inappropriate level of interest rates which is distorting asset markets, blowing bubbles and will eventually end up in inflation. They’re imposing long-term harm for no short-term good here.”
Kelly believes that the non-movement from the Fed is due to the upcomng U.S. Presidential election.
“If they (The FOMC) had come out and hiked today and if we’ve had some sort of tantrum in the markets which amounted to a big sell-off in the stock market that could have had a political effect in this election.”
See more of Fed Chair Janet Yellen explain why Fed left rates unchanged below.
Here are the final numbers from Wednesday, September 21, 2016 on Wall Street:
Dow Jones Industrial Average: 18,248.88(+163.92 / +0.66%)
