TLDR:
- Trump criticizes the Federal Reserve’s recent interest rate cut as “too big” and “political”
- September inflation report shows 2.4% annual increase, with a 0.2% monthly increase
- Trump and allies claim the rate cut was a pre-election maneuver
- Biden administration focuses on the annual inflation rate in their response
- Federal Reserve’s next meeting is after Election Day, with potential future rate cuts discussed
The Federal Reserve’s recent decision to cut interest rates has ignited a political debate following the release of the September inflation report. Former President Donald Trump and his allies have criticized the move, while the Biden administration has focused on the annual inflation rate in their response.
On Thursday, October 10, 2024, the Consumer Price Index (CPI) report revealed that prices increased by 2.4% over the last year, showing a slight deceleration from August’s 2.5% annual gain.
However, the monthly increase of 0.2% in September, higher than economist estimates of 0.1%, has drawn attention from various political figures and economic analysts.
During an appearance at the Detroit Economic Club, Trump stated, “The Federal Reserve brought the interest rates down a little too quickly. It was too big a cut and everyone knows that was a political maneuver that they tried to do before the election.” This marks Trump’s most direct critique of Federal Reserve Chairman Jerome Powell in recent months.
Trump’s allies, including the Make America Great Again, Inc. Super-PAC, echoed his sentiments, suggesting that the inflation reading could be part of “the Fed’s worst nightmare.” They argue that the rate cut was a pre-election tactic that may have negative consequences for the economy.
In contrast, the Biden-Harris administration chose to highlight the annual inflation rate in their response. National economic adviser Lael Brainard stated,
“Inflation has fallen back down to 2.4%, the same rate as right before the pandemic. We keep making progress.”
The Federal Reserve’s Open Market Committee is not scheduled to meet again until after Election Day. Some analysts, like Max Kettner, HSBC chief multi-asset strategist, believe that 25 basis point cuts at the last two meetings of the year are “pretty much baked into the cake.”
However, Atlanta Fed president Raphael Bostic told The Wall Street Journal that he was “totally comfortable” with holding steady next month and had already estimated just one more rate cut this year.
The political commentary surrounding the Federal Reserve’s actions has reignited discussions about the central bank’s independence. In August, Trump mentioned he would like a “say” in setting interest rates, raising concerns about potential attempts to reduce the Federal Reserve’s autonomy if he were to win the upcoming election.
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