Was the Fed Rate Cut Political?
Summary from the AllSides News Team
On Wednesday, the Federal Reserve cut interest rates by 50 basis points, lowering the federal funds rate from a range of 5.25-5.5% to 4.75-5%. How will it affect the election?
From the Right: Former President Trump and investor John Paulson have argued that cutting rates before November is political. Fox Business (Lean Right bias) commentator Larry Kudlow called it a "gift to Kamala Harris." They argue that consumer affordability is the Achilles heel of "Bidenomics" and that cutting rates, which may allow the economy to grow faster, interferes with the election, helping Harris.
From the Left: New York Times Opinion (Left bias) writer Peter Coy argued that the right's position doesn't hold up to scrutiny. He said it would have been political not to cut rates when they are so high, and "If the members of the Fed committee had really wanted to help the Democrat get elected, they would have started cutting earlier, since it takes at least half a year, and possibly much longer, for changes in interest rates to affect the real economy."
For Context: The Fed takes pride in its independent decision-making. Trump has suggested the president should have more say in Fed decisions. Although Trump opposed a rate cut, Rep. Dan Meuser (R-PA), Sen. John Kennedy (R-LA), and Sen. Thom Tillis (R-NC) agreed with the cut. Sen. John Hickenlooper (D-CO), Sen. Elizabeth Warren (D-MA), and Sen. Sheldon Whitehouse (D-RI) called for a 0.75 percentage point cut.
Featured Coverage of this Story
From the Center
How Will Interest Rate Cut Impact Election? Here’s What To Know As Fed Makes First Cut Since 2020The Federal Reserve announced its first interest rate cut in four years Wednesday, one of its most consequential decisions in recent memory, a move likely to be panned by former President Donald Trump and celebrated by Vice President Kamala Harris.
Interest rates can become a hot-button issue around elections, considering lower rates are a much more popular policy as they can boost personal finances with cheaper mortgages and lower interest on student and small business loans.
From the Left
There Was Nothing Political About the Fed’s Big Interest Rate CutWas it “political” for the Federal Reserve to cut interest rates less than two months before the presidential election, as Donald Trump has charged? Not a bit. Not cutting rates is what would have been political.
On Wednesday, the Fed’s rate-setting Federal Open Market Committee cut the target range for the federal funds rate — the short-term interest rate it controls — by half a percent. A cut that big was at the high end of forecasters’ predictions. More often the Fed moves a quarter-point at a time, but the...
From the Right
Larry Kudlow: This is the Fed's 50-basis point gift to Kamala HarrisThe Fed's 50-basis point gift to Kamala. That's the subject of the riff. 48 days before the election and it looks like Fed Chair Jay Powell just gave Kamala Harris a 50-basis point gift by slashing their target rate by half of 1%. This may well put the central bank smack in the middle of presidential politics – something they pledged not to do.
Now, in light of a modest decline in commodity prices and longer term interest rates, along with a softening in the labor market, a 25-basis point cut would...
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