The Fed says it will jack interest rates up higher if the next president pushes to further stimulate the economy by tampering with fiscal policies.
Both Donald Trump and Hillary Clinton have called for increased government spending on infrastructure, so if the next president follows through with that pledge it’s likely the Fed will hike rates one or two more times than it had otherwise planned, Bloomberg reports.
US central bankers say they welcome such a step, but would need to raise rates to offset the extra demand brought on by a bigger budget deficit. With the economy already running close to capacity, there's no need for an additional boost in both monetary and fiscal policy. [Bloomberg]
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