Federal Reserve slashing rates ahead of Election Day would likely just superficially boost US wallets: experts

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The Federal Reserve is anticipated to slash interest rates this year ahead of Election Day, which will likely lead to a superficial boost to Americans feeling wealthier ahead of casting their votes, though the cuts would have detrimental effects in the long run, according to experts. The temporary boost to the economy driven by an ease of access in terms of debt may make Americans feel wealthier because they're able to spend more, but the long-run effects of spending outside of their means will be detrimental. The Federal Reserve is widely anticipated to cut rates this year during two of its four meetings, which President Biden’s campaign could point to as evidence inflation is slowing and boost confidence among voters in the economy. However, experts argue that rate cuts will not make up for the damage that Biden's economic policies have done. The Federal Reserve left interest rates unchanged at its March meeting for the fifth straight time, and kept the federal funds rate between a range of 5.25% to 5.5%, which is a 22-year-high. The central bank expects to cut interest rates three times in 2024. The Fed slashes interest rates when it has confidence in the robustness of the economy, not when experts are concerned about the state of the economy. The Fed's decisions are made without political bias, according to Federal Reserve Chairman Jerome Powell. However, experts argue that the Fed is no longer a politically independent institution and that politics is largely behind the decisions. The economy is a top issue for voters, with a Fox News poll finding that 61% of voters believe Biden has failed at handling the economy. The savings rate has tanked, which is detrimental to long-run economic growth.

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https://www.foxbusiness.com/economy/federal-reserve-slashing-interest-rates-ahead-of-election-day