President breaks tradition, forecasts Fed action amid voter concerns over living expenses
President Joe Biden hinted that the Federal Reserve might soon lower interest rates as his administration ramps up efforts to tackle housing affordability ahead of the upcoming election battle against Donald Trump.
“I can’t guarantee it. But I bet — you betcha — those rates come down more because I bet you that that little outfit that sets interest rates, it’s going to come down,” Biden stated during a speech in Philadelphia on Friday, refraining from specifying a timeline for potential rate cuts.
Market expectations align with Biden’s prediction, with investors anticipating Federal Reserve Chair Jerome Powell to initiate rate cuts starting as early as June.
Powell told lawmakers that officials are nearing the point where they feel confident enough to begin lowering rates, further solidifying expectations for upcoming changes.
Friday’s jobs report suggested a gradual slowdown in the labor market, with easing employment and wage gains. This trend offers hope for sustained economic growth without significant inflation, allowing the Federal Reserve to consider rate adjustments.
Read more: Mortgage rates respond to economic shifts: What’s next?
While the White House usually refrains from commenting on Federal Reserve decisions, Biden broke this tradition in December, suggesting that favorable job numbers and subdued inflation were creating an environment for the Fed to halt further rate hikes.
During Thursday’s State of the Union address, Biden reiterated the need for measures to boost housing supply amid concerns about the rising cost-of-living. He also reiterated his expectation for interest rates to decrease, proposing a $400 per month tax credit for new homebuyers to counter the impact of higher mortgage rates.
“Mortgage rates will come down as well, and the Fed acknowledges that,” Biden affirmed during his Thursday address.
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