Our lead­ers have the right to ques­tion the Fed

USA TODAY US Edition - - OPINION - Mark J. Grant

The Fed keeps call­ing for rais­ing rates in a re­turn to “nor­malcy.” I would ar­gue, with all of the cen­tral bank in­ter­ven­tion here and abroad, that there has been no “nor­malcy” for al­most a decade. There is no good rea­son, in my view, to raise rates based upon some aca­demic the­ory of “nor­malcy.”

It is cer­tainly the case, as ex­em­pli­fied by the Tax Cuts and Jobs Bill, that the pres­i­dent and the Congress are try­ing to grow the econ­omy. By al­most any mea­sure that can be uti­lized, they are suc­ceed­ing. At the same time, rais­ing in­ter­est rates has the ex­act op­po­site ef­fect. Ris­ing rates means com­pa­nies, peo­ple and mort­gage hold­ers have to pay higher in­ter­est rates, which slows down the econ­omy. Con­se­quently, in my view, the Fed, Congress and our pres­i­dent are now in op­po­si­tion.

The Fed, while an in­de­pen­dent in­sti­tu­tion, is also Amer­ica’s cen­tral bank and the pres­i­dent — and any pres­i­dent of ei­ther party — has the right, if not the obli­ga­tion, to ques­tion what it is do­ing as a mat­ter of pol­icy. I would also make the same com­ment for any mem­ber of Congress (of ei­ther party). Re­mem­ber, the Fed was cre­ated by an act of Congress in 1913, the Fed­eral Re­serve Act. It is an in­de­pen­dent in­sti­tu­tion by de­sign, but it is also part of the gov­ern­ment of the United States.

The no­tion of in­de­pen­dence is not with­out mean­ing. The Fed has been given the abil­ity by Congress to de­cide the mon­e­tary poli­cies for the coun­try. No one can tell it what to do. How­ever, hav­ing said that, it does not mean, in my opin­ion, that a pres­i­dent, or a per­son in Congress, can­not have an opin­ion, and state it pub­licly, when they dif­fer with the ac­tions that the Fed may im­pose upon the coun­try.

Mark J. Grant, chief global strate­gist at B. Ri­ley FBR.

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