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Watch onWASHINGTON - The U.S. Federal Reserve looks on track to cut interest rates as the presidential campaign season heats up, potentially delivering President Joe Biden a boost as polls show Americans dislike his handling of the economy.
"Rate cuts are massively popular with people. It will really help build confidence in the economy just as people are paying closer attention to the election," said Celinda Lake, a top Biden pollster in his 2020 campaign who has recently done private polls on the Fed for a client."People are really feeling like they are being gouged every way to Sunday.
Lindsay Owens, head of the Groundwork Collaborative, a progressive Washington think tank, is skeptical that it will. With the unemployment rate low, the economy growing at a strong pace and inflation still a concern, the Fed will cut rates too slowly to aid Biden all that much politically, she said. The developing dynamic between Biden, the economy and the Fed is in contrast to what former presidents Jimmy Carter and George H. W. Bush faced in the late 1970s and early 1990s, when inflation and Fed rate hikes arguably hurt their reelection chances. Both lost.
"I can’t guarantee it, but I’ll bet you — I’ll bet you those rates come down more because I bet you that little outfit that sets interest rates is going to come down," Biden said. Trump, who has his own tangled history with Powell, will no doubt take note of any rate cuts. He promoted Powell, a Fed governor at the time, to chair, but quickly clashed with him for raising interest rates – accusing him of trying to wreck the economy and at one point all but declaring him an enemy of the people.
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