For the first time in four years, the US Federal Reserve is lowering its key interest rate. Donald Trump is unlikely to like the decision shortly before the US election.
Washington DC – The US Federal Reserve (Fed) has reacted to the slowing inflation and is lowering the key interest rate for the first time in four years. The interest rate was reduced by 0.5 percentage points on Wednesday and is now in the range of 4.75 to 5 percent. Commercial banks can borrow money from the central bank at this rate.
This is an unusually large interest rate move – which took place shortly before the US election on November 5th. The central bank also signaled further interest rate cuts this year. The change of course towards a looser monetary policy was expected. However, it was unclear whether the central bank of the world’s largest economy would opt for this major jump in interest rates or take the more cautious path and only lower interest rates by 0.25 percentage points.
US Federal Reserve lowers key interest rate – Donald Trump is not happy
The decision to cut interest rates by the US Federal Reserve is likely to Donald Trump not go down well. The candidate of the republican for the US election had repeatedly called for the Fed to keep interest rates stable before the vote. The Fed last lowered the key interest rate in March 2020. At that time, the decision was made to stimulate the economy in the beginning of the corona pandemic.
Donald Trump and his team assume that a rate cut by his competitor Kamala Harris If it becomes cheaper to borrow money, the candidate of the Democrats easier to convince the citizens of the USA that the economy is in good shape. According to the US, economic policy is current polls in the USA as one of the most important factors in the voting decision.
Inflation is an election issue in the USA and offers Donald Trump a target
The Fed’s decision to cut interest rates in the US is a reaction to the slowing inflation. Price increases have recently slowed down. This gave the Federal Reserve more room to maneuver for interest rate cuts. The European Central Bank had already initiated the interest rate turnaround in June.
The rapid inflation in the USA had caused the government to Joe Biden and Kamala Harris under pressure and gave Donald Trump a target. Many everyday products are currently more expensive than they were during Trump’s term in office.
Donald Trump is a sharp critic of the US Federal Reserve
The Republican presidential candidate is considered a sharp critic of Fed Chairman Jerome Powell. And the central bank’s current decision to cut interest rates is unlikely to ease the relationship. Trump told the TV station Bloomberg has already signaled that in the event of a victory in November he could take control of the previously independent central bank. (dil/dpa)
#Federal #Reserve #cuts #interest #rates #risks #trouble #Trump