After months of lamenting high interest rates and the burden they impose on consumers, Republicans for some strange reason are reacting negatively to the Fed’s action. On Wednesday, the central bank announced a significant cut of half a percentage point—the first reduction since 2020—aimed at easing the financial strain on borrowers.
Fed Chair Jerome Powell emphasized the goal of achieving price stability without causing significant unemployment. “Today’s action signals our strong commitment to that goal,” he stated.
Despite the anticipated benefits for consumers and investors, the Republican 2024 ticket is outraged that the announcement came just weeks before the election.
Trump suggested the Fed’s timing could be politically motivated during an event in New York, questioning, “I guess it shows the economy is very bad… assuming they’re not just playing politics.” This backlash is particularly ironic, given Trump appointed Powell in 2018 and previously pressured the Fed to lower rates for his benefit.
Now, Trump and his allies are framing the rate cut as a form of election interference. Economic advisor Stephen Moore lamented that the announcement so close to the election “screams of interference.”
Fox Business host Larry Kudlow echoed this sentiment, arguing the Fed could have waited until after the election to avoid politicizing its decision.
“Why they couldn’t have waited until the day after the election — which would have depoliticized the whole Fed story,” Kudlow complained.
At a rally, Trump’s vice presidential pick, J.D. Vance, faced boos when asked about the rate cut but remarked that it pales in comparison to the struggles faced by American families in recent years.
Right-wing commentators on social media have also speculated about a conspiracy behind the Fed’s timing. A pro-Trump account suggested the cut is either a sign of an impending economic crash or a ploy to manipulate the election. Vivek Ramaswamy added sarcastically, “Thank god for the independence of the Fed!”
Rep. Andy Ogles (R-Tenn.) accused the Biden administration of politicizing the Fed, claiming the rate cut was clearly a political move.
While Republicans have been using inflation as a weapon against President Biden, it appears their true frustration lies in the potential for economic improvement to undermine their electoral chances.
In the wake of the Fed’s announcement, stock markets soared. The Dow rose by 537 points (1.3%), the S&P 500 gained 1.6%, and the Nasdaq jumped 2.3%, with tech stocks like Nvidia and Tesla seeing significant increases.
The Fed’s cut, the largest since the onset of the pandemic, signals a shift towards supporting employment as the economy stabilizes. Powell indicated that while the labor market remains strong, it isn’t as robust as pre-pandemic levels.
Market analysts noted that the Fed’s decision is an insurance policy against potential labor market weakening, reflecting its evolving focus from curbing inflation to maximizing employment. While investors cheered the move, it has left Republicans in a quandary as they grapple with the implications for their electoral strategies.
