It’s possible that the economy isn’t doing well enough to absorb a 2.5% increase. The fed moves in .25% increases so that will take over a year put into place at this rate. So they have ample opportunity to see how things are going before continuing. In fact, it’s safe to say that this is exactly what they will be discussing this Tuesday. Although they will probably go ahead with this increase to 1.75%, that’s still really low and shouldn’t have any detrimental effect on the economy.

As for politics and the fed, I would say that there is almost no politics in the current fed actions. It’s only my opinion but from what I have seen and read, the Fed may seem to lean to the right but have plenty of problems with the fiscal policies of the current administration. They would prefer Pay-go rules, less of a deficit and more reasonable approaches to social security and medicare. It’s not easy to fit their actions into an agenda other than their own, which is apparent to anyone that follows their speeches and meetings