Trump, Harris Angle to Gain Political Edge From Fed Rate Cut
(Bloomberg) -- The Federal Reserve’s move to slash interest rates reverberated across the 2024 presidential race as Democrat Kamala Harris hailed the move as a boon for middle class families while Republican Donald Trump suggested the cut may have been politically motivated.
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The heated rhetoric over the Fed’s decision to lower its benchmark interest rate by a half percentage point highlighted how the central bank — an independent institution whose Chair Jerome Powell has pledged not to allow political pressures to influence decision making — could be swaying the momentum of the 2024 presidential race with just seven weeks until Election Day.
The dueling narratives also underscored the extent to which the economy and interest rates have rapidly become a focal point in the race, with both parties seeking to use the move to bolster their election standing.
Trump, speaking at a campaign stop at a bar in Manhattan, framed the cut as a “very unusual number” and bad news for his opponent, whatever the Fed’s motivation.
“I guess it shows the economy is very bad, to cut it by that much, assuming they’re not just playing politics,” Trump said. “The economy would be very bad, or they’re playing politics, one or the other, but it was a big cut.”
Harris, in a statement, cast the decision as particularly “welcome news for Americans who have borne the brunt of high prices.” Her statement betrayed the extent to which inflation, which has hit US households hard and soured voter perceptions of President Joe Biden’s handling of the economy, is one of her top political liabilities.
“I know prices are still too high for many middle class and working families, and my top priority as President will be to lower the costs of everyday needs like health care, housing, and groceries,” Harris added, seeking to draw a contrast with Trump’s agenda.
“This is the opposite of what Donald Trump would do as President. While proposing more tax cuts for billionaires and big corporations, his plan would increase costs on families by nearly $4,000 a year by slapping a Trump Tax on goods families rely on, like gas, food and clothing,” she said.
Biden also hailed the move as marking “an important moment” in the fight against inflation. “Inflation and interest rates are falling while the economy remains strong,” he said in a statement on X. “The critics said it couldn’t happen – but our policies are lowering costs and creating jobs.” The president said he would discuss the move further on Thursday.