The Federal Reserve Board of Governors put its thumbs on the scale of the 2024 election after it decided to cut its key interest rate by half a percentage point less than two months before Americans go to the polls, Alabama’s senior senator said Wednesday.
“The Fed’s drastic rate cut is shamelessly political. Our nation’s central bank has no business moving rates this close to an election and is clearly trying to tip the balance in favor of Kamala Harris,” said Sen. Tommy Tuberville, R-Ala.
Tuberville said he was “proud” of Michelle “Miki” Bowman, a board member who was the first to dissent to a Fed decision since 2005. Bowman expressed concern in the past that inflation had not been fully defeated, said she would have preferred a quarter-point rate cut.
The rate cut, the Fed’s first in more than four years, reflects its new focus on bolstering the job market, which has shown clear signs of slowing. Coming just weeks before the presidential election, the Fed’s move also has the potential to scramble the economic landscape just as Americans prepare to vote.
The central bank’s action lowered its key rate to roughly 4.8%, down from a two-decade high of 5.3%, where it had stood for 14 months as it struggled to curb the worst inflation streak in four decades. Inflation has tumbled from a peak of 9.1% in mid-2022 to a three-year low of 2.5% in August, not far above the Fed’s 2% target.
In a statement and in a news conference with Chair Jerome Powell, the Fed came closer than it has before to declaring victory over inflation.
“We know it is time to recalibrate our (interest rate) policy to something that’s more appropriate given the progress on inflation,” Powell said. “We’re not saying, ‘mission accomplished’ … but I have to say, though, we’re encouraged by the progress that we have made.”
The Associated Press contributed to this report.
