Alabama’s senior senator, Tommy Tuberville, accused the Federal Reserve Board of Governors of playing politics by cutting its key interest rate by half a percentage point less than two months before the 2024 election. Tuberville accused the Fed of trying to tip the balance in favor of Kamala Harris and expressed pride in board member Michelle “Miki” Bowman for being the first to dissent since 2005. Bowman had expressed concerns about inflation and would have preferred a smaller rate cut.
The rate cut, the first in over four years, was aimed at bolstering the job market, which had shown signs of slowing. The move has the potential to shake up the economic landscape right before Americans head to the polls. The Fed’s decision lowered the key rate to around 4.8%, down from a two-decade high of 5.3%, as it worked to combat the worst inflation in four decades. Inflation has since dropped to 2.5%, close to the Fed’s 2% target.
Fed Chair Jerome Powell stated that it was time to adjust interest rate policy in response to progress on inflation, though he stopped short of declaring victory. Powell emphasized the progress made and expressed encouragement about the current state of inflation. The move represents a significant shift in Fed policy and comes at a critical time as the country prepares for the upcoming election.
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