The US, which has managed to stay at the top of its economic agenda for years with what the central bank has done and will do, is being discussed more intensely with one item this year: Elections. The US voter will elect one of Clinton and Trump as president on November 8. Another issue that is spoken in the markets is whether an interest rate increase will be made during the election period, and when this question is asked, an answer appears in the minds that such a thing will not be done before the election.
Is that so? If we look since 1980, 60 percent of the interest rate increase decisions have been made in the election years. In fact, the Fed seems to be very happy to raise interest rates during the election years. The Fed will have three meetings for this year: September, November and December. Many people argue that the Fed will not support the idea of an interest rate hike when the elections are so close. The fact that we put the middle two sentences ago proves that this idea is not consistent. The Fed will decide entirely on data, not election.
Voters, of course, care about the economy. The results of scientific research also support this and underline that voters are “myopic” in this regard. While even the economist class in societies can lead to realizations in their predictions, we cannot of course expect ordinary people to make great economic predictions. People’s preferences are to choose the managers in charge if the economy and markets are going well in the short term.
Below is an infographic prepared by Wells Fargo analysts that summarizes Fed actions in election years.