Biden celebrates interest rate cuts; “shows that inflation has decreased”

Washington. US President Joe Biden said on Thursday that the Federal Reserve’s (Fed, central bank) decision to lower interest rates was “an important sign” that inflation has decreased, adding that economic policies of Donald Trump failed in the past and will surely “fail again” if they are reactivated.

“Reducing interest rates is not a declaration of victory.” “It is a statement that we are moving forward, and it indicates that we have entered a new phase of our economy and our recovery,” Biden declared at the Economic Club of Washington, DC.

The Fed cut its reference interest rates on Wednesday for the first time in more than a year and opted for a sharp drop of half a percentage point, to leave it in a range between 4.75 and 5.00 percent, with less than two months left. the presidential elections in the United States.

This week’s Fed policy meeting was the last before voters go to the polls in what is expected to be a close US presidential election on November 5.

It was difficult for Biden to demonstrate that his administration had made progress on the economy, due to inflation, which spread throughout the world as the Covid-19 pandemic subsided and problems in supply chains multiplied. Inflation was also boosted by Russia’s invasion of Ukraine.

The decision by the Fed, which is a central bank independent of the government, will have an impact on the purchasing power of Americans by making credit cheaper, and that could give a boost to the presidential candidacy of Vice President Kamala Harris.

Trump says the Fed is playing politics by lowering rates

The Republican presidential candidate, former President Donald Trump (2017-2021), suggested that the Fed is playing politics with its decision this Wednesday. “I think it shows that the economy is in too bad shape to cut (rates) that much,” Trump said in televised comments from New York. “The economy must be very bad or they are doing politics. One thing or the other. But it was a big cut,” he added.

Biden said Trump wants to extend tax cuts that disproportionately benefit the wealthy, at an estimated cost of $5 trillion, and implement tariffs that could raise prices by nearly $4,000 per family, something Biden called a “new sales tax.”

Many economists had predicted that a recession would be necessary to reduce inflation, but they were proven wrong, as policies aimed at expanding manufacturing, investing in clean energy, and limiting medicine costs for seniors helped create 16 millions of jobs and to increase wages, said Chief of Staff Jeff Zients.

National Economic Council Director Lael Brainard said the Fed’s decision sent a “clear signal that inflation is back down,” noting that price pressure was now at the same level seen in the month before the start of the pandemic.

According to Brainard, the mortgage rate reductions already seen would save the average home buyer $5,000 a year, and the savings would increase as rates continue to fall. The cut would also save the average new car buyer nearly eleven hundred dollars over the course of the loan.