In Reply to: Re: PCE ticks up again inflation still a thing posted by confused442 on October 29, 2026 at 17:36:51
• Brad Paye (Finance Expert, Virginia Tech): Paye noted explicitly ahead of the meeting that textbook economics demanded a rate hike given hot inflation data, but that "political considerations five days before an election may lead the Fed to wait." He emphasized that politics would be the "elephant in the room," as the Fed is acutely aware that a pre-election hike could threaten its perceived autonomy.
• Nicholas Economides (Economics Professor, NYU Stern): Economides pointed out that the proximity of the election mathematically dictated a pause. He argued that the Fed naturally avoids "taking any radical action" right before voters head to the polls because the economy wouldn't have time to actually adjust to the policy shift before Election Day anyway.
• Deutsche Bank Research Team: In an institutional memo to clients, Deutsche Bank analysts explicitly stated that the midterms factored into the pause. They noted that the Fed purposefully preferred to "stay out of the headlines" rather than hike rates at a moment when consumer affordability is the primary voter concern.
• Greg Ip (Chief Economics Commentator, The Wall Street Journal): Ip pointed out that even if Fed officials don't say the word "politics" out loud, "elections can influence your thinking even if you don't say so." He noted that unless a central bank action is life-or-death urgent, it will always prefer to hold off on rate hikes until political passions cool.
• Wendy Edelberg (Senior Fellow, Brookings Institution): While not explicitly using the word "political," Edelberg pointed out the stark macroeconomic contradiction of the Fed's decision. She noted that with a perfectly stable labor market and high inflation, the economic choice to pivot to a pause right after September's hike made little sense, stating, "In terms of the economics of it, I don't totally understand the logic.
I won't paste it but in my quarterly investment review from Fidelity that I just got they explicity called out that while not raising rates was probably good for the markets they figure it's inevitable the rates will go up again soon based on the actual economic data and that it didn't now because of the midterms.