By Andrea Shalal and Nandita Bose
WASHINGTON (Reuters) -U.S. President Joe Biden said on Thursday he expects the Federal Reserve to continue cutting interest rates and vowed that his administration would keep working to lower costs for Americans.
Biden used an Economic Club of Washington event with 500 guests to promote his administration’s policies to bring down inflation after the COVID-19 pandemic and Russia’s invasion of Ukraine, issues that have driven voters’ anxiety.
“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 said.
Inflation is much closer to the Fed’s 2% target, Biden said, calling the U.S. central bank’s half-percentage-point cut in interest rates on Wednesday “good news for consumers.”
“I’m not here to take a victory lap … We do have more work to do,” Biden added.
Many economists had predicted a recession would be needed to lower high inflation, but have so far been proven wrong as Biden’s policies aimed at expanding domestic manufacturing, investing in clean energy and other infrastructure, and capping drug costs for seniors helped create 16 million jobs and raised wages, Jeff Zients, the president’s chief of staff, told reporters in a call.
Polls show Americans remain deeply worried about the economy and inflation, with Vice President Kamala Harris, who became the Democratic presidential nominee when Biden bowed out of the race in July, and Republican former President Donald Trump essentially deadlocked less than seven weeks before the Nov. 5 U.S. election.
A Reuters/Ipsos poll released this week showed Trump had an advantage on the issue of inflation, which surged under Biden to a 40-year high in 2022. Some 43% of voters in the poll said Trump would be more likely to “lower prices for everyday things like groceries and gas,” compared with 36% who picked Harris.
Fed Chair Jerome Powell, speaking on Wednesday after the U.S. central bank announced its oversized rate cut, said the economy remained strong but policymakers wanted to stay ahead of and stave off any weakening in the job market. The unemployment rate, now at 4.2%, is more than half a percentage point higher than it was when the Fed began an aggressive rate-hike campaign in March of 2022.
National Economic Council Director Lael Brainard said on the same call with reporters that the Fed’s rate cut sent a “clear signal that inflation has come back down,” noting that it was now at the same level seen in the month before the COVID-19 pandemic began.
Mortgage rate reductions that have already happened would save the average home buyer $5,000 a year, with savings to increase as the rates declined further, she said.
But Brainard added that further work was needed to drive down housing costs and support childcare needs.
The White House is monitoring escalating tensions in the Middle East, but sees no significant risks to the broader economic outlook, said an administration official, who did not wish to be named.