Harris "Americans Hit by High Inflation"
Trump "Shows Economy Is Bad"
Moody's "Harris Will Gain Economic Momentum"
U.S. Federal Reserve's (Fed) decision to implement a 'big cut' (0.5 percentage point interest rate reduction) was welcomed by President Joe Biden and Democratic presidential candidate Vice President Kamala Harris. On the other hand, former President Donald Trump, the Republican presidential candidate, expressed discomfort, calling the decision politically motivated and a reflection of the Biden administration's mistakes.
On the 18th (local time), according to Bloomberg and The Washington Post (WP), President Biden posted on his social media platform X (formerly Twitter), "We have just reached a critical moment," adding, "The economy remains strong while inflation and interest rates are falling," welcoming the rate cut. He further stated, "Critics said this could not happen, but our policies are lowering costs and creating jobs."
Vice President Harris said in a statement, "This is especially welcome news for Americans hit hard by high prices," adding, "Prices remain too high for many middle-class and working families. As president, my top priority is to lower the costs of everyday necessities like healthcare, housing, and groceries."
Meanwhile, former President Trump’s camp pointed out that the Fed’s decision was a ‘political move.’ With inflation considered the biggest failure of the Biden administration, lowering interest rates creates a favorable situation for Vice President Harris.
At a rally that day, former President Trump called the decision "a very unusual number," saying, "If they weren’t just playing politics, such a large cut shows the economy is very bad." He criticized the Biden administration’s economic policies. Earlier, in July, Trump said in an interview with Bloomberg Businessweek that the Fed should not lower rates before the election.
Stephen Moore, Trump’s economic advisor, called it "unwise" and "a huge shock." He said, "They can cut by 0.5 percentage points, and the Fed has more data than I do," but added, "Why now? They could have cut 0.25 percentage points now and another 0.25 percentage points right after the election. Why didn’t they wait?"
John Paulson, a hedge fund billionaire and one of Trump’s major donors, said, "The Fed should not have interfered in election politics," noting, "The Fed has never cut rates this close to an election, and this is the first time in this century that the Fed has cut rates this much since the 2008 global financial crisis." He also questioned, "Whether this decision was intended to help Vice President Harris’s campaign," criticizing, "The Fed claims to separate itself from politics, but the timing of this move raises doubts about that claim."
The Fed’s decision is expected to have a significant impact on the U.S. presidential election. Inflation and high interest rates have recently been cited as one of the major issues in many polls for this election. Mark Zandi, chief economist at Moody’s Analytics, said, "This cut will be the start of a series of rate reductions, and the Harris campaign will gain economic momentum."
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