After the Federal Reserve announced a long-awaited half-percentage point cut in its key lending rate on Wednesday, US Vice President Kamala Harris hailed the first rate cut in four years as “welcome news” for Americans facing rising prices. But Republican Donald Trump, his Democratic presidential rival, and his running mate, Sen. J.D. Vance of Ohio, blasted Fed Chairman Jerome Powell’s actions, saying they show the “economy is very bad.”
The measure is specifically designed to lower borrowing costs for consumers and businesses ahead of the November election.
The Fed’s decision marks a shift from its previous high-interest rate strategy aimed at tamping down inflation, as price levels have started to fall toward the central bank’s long-term target of 2 percent.
Here’s what Kamala Harris, Trump and Vance had to say:
Following Powell’s announcement, Harris reaffirmed her commitment to fighting inflation. “This announcement is good news for the American people who have borne the brunt of rising prices, but I remain committed to our efforts to keep prices down,” Harris said in a press release. Meanwhile, President Joe Biden hailed the decision as a “pivotal moment” in a post on X.
Speaking to reporters during a visit to a New York City bar, Trump said the rate cut “is a sign that the economy is in a very bad state, to cut it this much, assuming it’s not just a political ploy.”
He called the move to cut interest rates by 50 basis points a “major cut.”
Asked about cutting interest rates at a rally in North Carolina, Vance argued that a half-point cut was “nothing” compared to what Americans have faced over the past three years, a comment that drew boos from the audience.
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Will a Fed rate cut help Harris’ campaign win over voters?
At a press conference on Wednesday, Chairman Powell said the economy is “growing at a solid pace” and that the interest rate cuts were implemented to keep the economy “in good shape.”
The Fed chairman also touched on the issue of inflation, saying, “Inflation is coming down.”
He also addressed concerns about political influence on interest rate decisions, reiterating the central bank’s independence and saying, “We are not in the service of any politician, any politician, any cause, any issue.”
David Wessel, a senior fellow at the Brookings Institution, said borrowing costs to take out a mortgage or buy a car are a major concern in the United States, highlighting the importance of borrowing costs and suggesting the Harris campaign could benefit from the rate cut.
Interest rates can be a contentious issue during elections because lower rates are often a more popular policy because they improve personal financial situations by lowering mortgage costs and interest on student and small business loans.
President Trump argued this summer that the Fed could be making a politically motivated decision if it decided to cut rates before the November election. He told Bloomberg that the Fed should not take such action, even though data suggests a rate cut is needed given slowing inflation and rising unemployment.
He promised that if elected, the Fed would “make significant interest rate cuts.”