Voters should not be surprised if and when the Federal Reserve soon lowers interest rates and reverses the course it set more than two years ago. After all, this would help tame inflation — and President Joe Biden’s reelection chances.
Despite issues that Democrats want voters to focus on, the electorate is most concerned with the economy and runaway prices. Exactly as they should be.
Fed Chair Jerome Powell this week indicated that the central bank plans to institute three interest rates cuts in 2024. This is certainly good news for the embattled incumbent.
Powell indicated cuts will proceed despite recent bumps in the nation’s inflation rate. The Fed has a 2% target, which has not been reached but will likely not interfere with plans to slash the cost of borrowing.
The chair explained to Congress that “we’re looking for data that confirm the low readings we had last year, and give us a higher degree of confidence that what we saw was really inflation moving sustainably down to 2%.
As part of its election campaign against Trump, President Biden wants the Federal Reserve to reduce interest rates beginning June in order to lower housing costs.
Currently interest rate at 5.5% and 10 year mortgage fixed rate at 6.20%.#ETF #ETP $IYR $DFAR $PSR $TIP pic.twitter.com/zQrpFlqv3S— Arthur Benta (@ArthurBenta) March 17, 2024
Even what is described as a “strong” labor market apparently will not dissuade the central bank from cutting interest rates. Powell confirmed this when he told lawmakers that “strong hiring in and of itself would not be a reason to hold off on rate cuts.”
The White House and national Democrats are obviously poring over Powell’s remarks with keen interest.
Though inflation eased, voters are well aware how much they suffered financially under the Biden administration. Historic levels followed the runaway spending enacted by liberals after taking control of the Oval Office.
With the November election looming, leftists struggle to convince Americans that the economy is headed in the right direction.
In his recent State of the Union address, Biden attempted to gloss over years of staggering inflation and produced self-congratulatory numbers. But the average U.S. household continues to lose spending power with prices that far outpaced salary and wage increases.
His campaign holds out hope that the Fed will cooperate and pull back historically high interest rates instituted to fight inflation the president’s policies created.
It bears watching to see just how much the central bank moves to assist the president this fall.
