To stimulate the economy or not? That is a question the Federal Reserve is considering, and some analysts think the election may play a part in the decision.
Fed Chairman Ben Bernanke recently termed the labor market a grave concern, causing speculation that the central bank may buy more government bonds to lower interest rates. Doing so could raise stocks and improve President Barack Obamas re-election chances, USA Today noted.
The Fed is due to vote next week on the matter.
The Federal Reserve is supposed to focus on the economy, not politics. But at least one Fed official, Eric Rosengren of Boston, said that his colleagues may be reluctant to act because of the election. We dont get to pick the timing of the global showdown, he told the Boston Globe.
Former Fed counsel Cornelius Hurley of Boston University Law School said the bank officials ponder politics but do whatever they think is right.
A federal jobs report due today will play into the decision. One economist, Mark Zandi of Moodys Analytics, told USA Today that the Fed may enact a major stimulus in December. I think they would prefer not to be a topic in the November election, he said.
Ideally, the bank should set politics aside and do what is right for the economy, their area of expertise. That may be to leave well enough alone for now.