Republican presidential candidate Donald Trump has accused the Federal Reserve of being “politicized” after the central bank cut interest rates dramatically just weeks before the November 5 election.
Political games
“Such a large cut shows that either the economy is in very bad shape or they are playing political games,” the former Republican president said on the sidelines of a campaign trip.
Yesterday, the US Federal Reserve cut its interest rate for the first time since 2020, by half a percentage point (0.5%), to a range between 4.75% and 5%.
The cut is good news for Democratic candidate Kamala Harris, who is seeking to highlight President Joe Biden’s economic achievements in her race against Trump.
Trump has repeatedly criticized Federal Reserve Chairman Jerome Powell, whom he appointed, suggesting that the bank’s decisions are politicized, accusations the U.S. central bank has strongly denied.
Not too late
For his part, Jerome Powell said that the bank might have started cutting interest rates in late July if it had known that the labor market was slowing as quickly as it was.
“Would we have cut if we had received the July report before the meeting? We probably would have,” Powell said at a news conference on Wednesday after the central bank cut its benchmark interest rate.
“We didn’t make that decision, but… we could have,” he added.
He continued: The monetary policy decision announced by the Federal Reserve yesterday does not mean that it is late, but rather it is a commitment not to be late.
Towards the goal
The US Labor Department’s jobs report for July – released days after the Federal Reserve’s July 30-31 meeting – showed the unemployment rate rising to 4.3% and job growth slowing.
Although the subsequent August report showed the unemployment rate falling to 4.2%, it contained more evidence of a slowdown.
Powell said the labor market is strong and inflation is on track to decline toward the central bank’s 2% target, adding that today’s rate cut is an attempt to keep it that way.
