Biden: Fed rate cut is "declaration of progress" on crushing inflation
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President Joe Biden speaks at the Economic Club of Washington, D.C. on Thursday. Photo: Win McNamee/Getty Images
President Biden said on Thursday that the Federal Reserve's interest rate cut signals the nation had entered a "new phase" during a speech that touted his economic record.
Why it matters: Biden, who rarely speaks publicly about Fed policy decisions, pointed to lower rates as proof that the inflation burst that tarnished his economic legacy is all but over.
Driving the news: The Fed cut rates for the first time in four years on Wednesday and signaled that it would likely continue bringing rates down.
- Jerome Powell, the Fed's leader who was appointed by former President Trump in 2017, said the central bank cut by a half-percentage point as a preventative measure to keep the economy in "good shape."
What they're saying: Biden opened his speech before the Economic Club of Washington D.C. acknowledging the cut was "an important day for the country."
- "It's an important signal from the Federal Reserve to the rest of the country that after repeated interest hikes to cool down inflation, inflation has come back down," Biden said.
- "It's a signal we have entered a new phase in our economy and our recovery."
The intrigue: The economy is a central issue for the upcoming presidential election, with former president Trump using high prices as a line of attack on vice president Kamala Harris.
- Biden stopped short of saying the war on inflation had been won — but he suggested rate cuts prove how far the country had come in bringing inflation down.
- "The Fed lowering interest rates isn't a declaration of victory, it's a declaration of progress," Biden said. "This is a moment for individuals to feel greater confidence — buying a home, a new car, starting a family, starting new business, trading jobs."
Biden did not acknowledge signs of weakness in the labor market in recent months — one factor that pushed the Fed to cut rates.
What to watch: The Fed is an apolitical institution. Powell has said repeatedly that officials don't consider politics when making interest rate decisions.
- Even so, the Fed's pivot to lower interest rates comes at an awkward time that throws the central bank into election-year politics.
- Trump on Wednesday accused the Fed of "playing politics."
In his speech, Biden said he has respected the Fed's independence. He said that was different than Trump, who taunted the Fed for keeping rates high while he was in office.
