Biden Anticipates Continued Interest Rate Cuts by the Federal Reserve, According to Reuters

By Andrea Shalal and Nandita Bose

WASHINGTON – President Joe Biden announced on Thursday that he anticipates the Federal Reserve will continue reducing interest rates, emphasizing that his administration is committed to finding ways to lower costs for Americans.

During an event hosted by the Economic Club of Washington, which attracted 500 attendees, Biden underscored his administration’s efforts to combat inflation, which has been exacerbated by the COVID-19 pandemic and Russia’s invasion of Ukraine—factors that have contributed to widespread voter concern.

"Interest rates are going to be coming down and they’re expected to go down further. That’s a good place for us to be," the president stated confidently.

He noted that inflation is now much closer to the Fed’s 2% target and characterized the central bank’s recent decision to cut interest rates by half a percentage point as "good news for consumers." However, he tempered this optimism by acknowledging that more work lies ahead. "I’m not here to take a victory lap… We do have more work to do," Biden said.

While many economists previously believed that a recession might be necessary to bring down high inflation, they have been surprised by the resilience of Biden’s policies, which focus on expanding domestic manufacturing, investing in clean energy, and capping drug costs for seniors. These initiatives have reportedly led to the creation of 16 million jobs and increased wages, according to Jeff Zients, the president’s chief of staff.

Public sentiment remains anxious about the economy and inflation. Current polling indicates a deadlock between Vice President Kamala Harris and former President Donald Trump just weeks ahead of the upcoming U.S. election on November 5. A recent poll highlighted Trump’s edge on the inflation issue, with 43% of voters believing he would be more likely to "lower prices for everyday things like groceries and gas," compared to 36% who favored Harris.

Federal Reserve Chair Jerome Powell noted on Wednesday that, despite the strong economy, the central bank aims to proactively address potential weaknesses in the job market. The unemployment rate currently stands at 4.2%, which is more than half a percentage point higher than it was when the Fed began its series of aggressive rate hikes in March 2022.

Lael Brainard, Director of the National Economic Council, discussed the implications of the Fed’s rate cut during the same call with reporters, stating that it sends a "clear signal that inflation has come back down." She indicated that inflation levels have reverted to those seen prior to the pandemic.

She added that recent reductions in mortgage rates have the potential to save the average homebuyer about $5,000 annually, with savings expected to increase further as rates decline. However, Brainard emphasized that additional measures are necessary to lower housing costs and address childcare needs.

While the White House is closely monitoring rising tensions in the Middle East, an unnamed administration official stated that they do not perceive any significant risks to the overall economic outlook.