On Wednesday, Joe Biden told reporters that the Federal Reserve will lower interest rates by the end of the year. This assertion comes amid fresh data released this week showing that consumer inflation continues to run higher than experts predicted. “Well, I do stand by my prediction that, before the year is out, there’ll be a rate cut,” Biden said.
However, with inflation reported at 3.5% year-over-year and continuing to surge, the prospects for an imminent rate cut are rapidly dimming.
Biden’s unusual promise that would bind the Fed raises concerns about its autonomy as mandated by its congressional charter and federal law. Historically, the White House has steered clear of commenting on Fed decisions, claiming the administration respects the central bank’s “independence.” Biden himself has often promised to withhold comment on Fed decisions in the past when it was politically expedient for him.
ladies and gentlemen, BRRRRANDON:
"Before the year is out, there'll be a rate cut" pic.twitter.com/nZ5qjNEMQ8— zerohedge (@zerohedge) April 10, 2024
Sandra Smith of Fox News called Biden out for his unrealistic claims about inflation, pointing out the discrepancies with actual CPI data. “That is just factually incorrect. That is false,” Smith said. She also pointed out the increase in year-over-year inflation from 1.4% at the beginning of Biden’s term to 3.5% now. The economy under Biden’s watch has seen a significant increase in prices across the board — from food and clothing to new cars and gas — showing that the reality of ordinary Americans contradicts the administration’s rosy claims.
Biden’s unrealistic predictions not only raise questions about the Fed’s independence but also reflect a broader concern about the real-world effects of the massive borrowing, money printing, and spending policies that make up “Bidenomics,” which are driving prices up while driving domestic production down.
The debate over the Fed’s independence is not just a matter of party politics but points to a more fundamental concern about the integrity and effectiveness of the Fed’s approach to monetary policy. While the central bank’s long-term independence remains protected by its structure and the cover it receives from friendly politicians, the ever-diminishing public confidence in the institution seriously affects overall trust in the nation’s financial system.
