President Joe Biden on Thursday welcomed falling inflation and interest rates but stopped short of declaring victory on the economy during a speech at the Economic Club of Washington.
The president’s remarks come after the Federal Reserve announced its decision to cut interest rates by half a percentage point, or 50 basis points, marking its first rate cut in four years.
The decision lowers the target rate to between 4.75 and 5 percent.
“The Fed lowering interest rates isn’t a declaration of victory, it’s a declaration of progress,” Biden cautioned. “It’s a signal we entered a new phase in our economy and our recovery.”
Biden also discussed what the decision means for American consumers, workers, and businesses.
The president described the decision as “good news” for Americans and further suggested that it’s a great time to start a new business, purchase a home, or start a family.
“The cost of buying a home, a car, and so much more will be going down,” Biden said. “And it’s good news, in my view, for the overall economy. Because lower borrowing costs will support economic growth.”
The COVID-19 pandemic was the biggest challenge for the economy and “the inflation it created,” Biden said.
The Federal Reserve last cut rates in March 2020 in an emergency response to the economic shutdown prompted by the COVID-19 pandemic.
Jerome Powell, Chair of the Federal Reserve, called the decision to cut interest rates by half a percentage point a “good, strong start.” During his remarks announcing the decision, he said that the labor market is in “solid condition,” the U.S. economy is in “good shape” and “growing at a solid pace” with inflation coming down.
Powell also dismissed the notion that political motives played a role in the rate cut.
“This is my fourth presidential election at the Fed,” Powell said. “Our job is to support the economy on behalf of the American people.”
Biden also rejected the idea that the Fed’s decision was conveniently timed ahead of election day and designed to help boost Vice President Kamala Harris.
“By the way, I’ve never once spoken to the Chairman of the Fed since I became president,” Biden claimed during his speech.
Biden, however, met with Powell in the Oval Office in May 2022 to address inflation.
The president in his remarks also touted the “independence” of the Federal Reserve. If that independence was ever lost then it would cause “enormous damage to the economy,” according to Biden.
The economy is a top concern among voters in the presidential election.
About eight-in-ten registered voters, or 81 percent, say the economy will be very important to their vote in the 2024 presidential election, according to a Pew Research poll conducted earlier this month.
According to a new Yahoo/YouGov poll, more than half of participants say they are worried about the election’s effect on the economy. According to the poll, 42 percent believe that former President Donald Trump would do a better job handling the cost of living issue, compared to 40 percent of survey participants who are confident that Vice President Kamala Harris would be better at addressing the issue.
In response to the Fed’s bigger-than-expected rate cut, Trump said the move is a sign that the economy is in bad shape.
“I guess it shows the economy is very bad to cut it by that much, assuming that they are not just playing politics,” Trump told the media in Manhattan on Wednesday. “The economy would be very bad, or they are playing politics, one or the other. But it was a big cut.”
Harris called the rate cut “weclome news” and said she would continue to work to bring prices down.