Fed Up Friday: Trump and Yellen on the Verge of a Clash

As Trump takes office today, we look forward at the inevitable conflict to come between the President and the Fed. The tug-of-war may come thanks to the Fed’s target 2% inflation, the Fed’s lack of tech savvy, or something completely different.

Donald Trump and Janet Yellen Look to Be on a Collision Course

A New York Times article points out some interesting scenarios where President-Elect Trump’s economic policies may be at odds with the traditional stance of the Fed. The main sticking point may be in defining what amounts to a “growing” economy. Irwin said he sees a situation where Trump’s advisors may see the target 2% goal in GDP growth as inadequate, look instead to 3.5%-4%.

Yellen and company could see this as “overheating” an economy that’s still struggling. Such a situation could prompt less monetary action or a lowering of interest rates to combat what the Fed perceives as too aggressive growth.

New Doves will Soon Roost at the Fed

New Fed Presidents will soon take a seat at the FOMC’s table, as Business Insider reports. In the three-year cycle for Federal Reserve Presidents, the new roster includes many dovish idealists, including Robert Kaplan, Charles Evans, and Neel Kashkari. These people may not be the most dovish of all time, but when you take into account the Fed Presidents who will be leaving the Fed for now, their distinctively hawkish stances will really highlight the gap between these two groups’ mindsets.

Trump will also have a chance to reform the Fed with his own like-minded representatives, starting in one short year as Yellen’s reign at the top of the group comes to an end.

Move Over, Tech. Janet Yellen Eats the World

The impact of technology on macroeconomics and monetary policy is something TechCrunch says the Fed should look closer at. There seem to be two contradictory economic stories being told: technology continues to impact employment by making workers more and more obsolete, while “economists and political leaders around the world continue to hail tech as the key sector for future economic and employment growth.”

The disruptive effects of technology are only just beginning to be considered by the data-dependent Fed, who too often clings to the same metrics for current and future economic health.

Fed’s Policy Good News for Oil Exporters, Bad for Importers

With all the economic waves expected this year, Oilprice.com reported via Nasdaq to weigh in with their expert opinion on how oil will fare these violent market seas in 2017. Turns out, it’s a mixed bag of good and bad, depending on what aspect of the oil production process it is. Some analysts are speculating about how rate hikes would affect the oil market.

From their point of view, rate hikes on a small scale will have little impact, but more than 10 hikes could have a major effect on the price of oil in several nations. From the article: “All of this is good news in general for oil exporters including the shale producers, but bad news for oil importers such as some refiners.”

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