The Federal Reserve sharply cut interest rates by 50 basis points on Wednesday.
WASHINGTON—President Joe Biden praised on Thursday the Federal Reserve’s move to sharply lower interest rates, stating that the U.S. economy has entered “a new phase.”
Speaking at a lunch event hosted by the Economic Club of Washington, D.C., Biden said the Fed’s “lowering interest rates isn’t a declaration of victory. It’s a declaration of progress.”
He noted that more progress remains to be achieved.
The Federal Reserve slashed interest rates on Wednesday, kicking off its first easing campaign since the pandemic.
The central bank policymakers lowered the benchmark federal funds rate by 50 basis points to a range of 4.75 percent to 5 percent following its policy meeting.
Fed officials said in their statement that they have “gained greater confidence” in bringing inflation down and hence anticipate another 50-basis-point cut later this year.
“It’s a signal we’ve entered a new phase of our economy and our recovery,” Biden told more than 700 business executives.
He also said that he respected the Fed’s independence and was not involved in their monetary policy decision.
“That independence has served the country well,” he said.
During his 30-minute speech, Biden touted his policies and economic progress since taking office, including the recovery after the pandemic.
“I kept my promise. We’re in a better position than any nation in the world,” he said before wrapping up his speech.
The Fed’s move to lower rates for the first time in four years is important for consumers as it influences interest rates on credit cards, auto loans, mortgages, and other financial products, as well as savings accounts.
Top White House economic adviser Lael Brainard talked about the progress on Wednesday during a call with reporters, stating that the Fed’s decision is a “clear signal that inflation has come back down.”
“The declines in inflation and interest rates are welcome, but no one is declaring victory. The focus now has to be on sustaining the gains we’ve seen for middle-class families, workers, and small businesses,” she said.
Brainard noted that more work was required to improve labor force participation and bring down costs, notably housing prices, by developing millions of new affordable homes.The central bank’s decision to sharply lower interest rates just ahead of November’s presidential election, however, met with some criticism from Republicans, including former President Donald Trump.
“I guess it shows the economy is very bad, to cut it by that much, assuming they’re not just playing politics,” Trump, the Republican presidential nominee, told reporters during a visit to a New York City bar on Wednesday.
“The economy would be very bad, or they’re playing politics. But it was a big cut.”
In another interview recently, Trump also said he “strongly” believes presidents “should have at least a say” in the Federal Reserve’s monetary policy decisions.
Sen. Tommy Tuberville (R-Ala.), who sits on the Health, Education, Labor and Pensions Committee, also criticized the Fed’s decision as “shamelessly political” in favor of Democrat candidates.
“Our nation’s central bank has no business moving rates this close to an election,” Tuberville wrote in a post on X.
Federal Reserve Chair Jerome Powell dismissed allegations that the central bank’s first interest rate cut since March 2020 will affect the presidential election in November.
Speaking to reporters at the post-meeting press conference, Powell was asked about the timing of the rate cut and whether it has political motivations.
“This is my fourth presidential election at the Fed, and it’s always the same. We’re always going into this meeting in particular and asking, ‘What’s the right thing to do for the people we serve?’” Powell said. “And we do that and we make a decision as a group, and then we announce it.”
On Sept. 5, Trump delivered an economic speech at the Economic Club of New York, outlining his plans to reduce inflation, bring down prices, and generate more economic growth.
He told executives his plan of reducing the corporate tax rate from 21 percent to 15 percent but emphasized that it would only apply to companies that make their products in America.
Trump also promised “a massive increase in domestic energy supply” to reduce inflation.
The Economic Club’s president, David Rubenstein, stated that the White House contacted the club to request the lunch meeting with club members.
Rubenstein on Sept. 5 said that the club has also sent an invitation to Vice President Kamala Harris, the Democratic presidential nominee, to speak at the club but hasn’t yet received a response.
Andrew Moran contributed to this report.