Fed rate cut could have “significant” impact on 2024 elections

The Fed is expected to cut its benchmark interest rate, which is at a 23-year high, at 2 p.m. on Wednesday. It will be the first cut since it began a series of rate hikes to combat coronavirus-related inflation, and experts are predicting a rate cut of 25 to 50 basis points.

Not only will this move provide some relief to consumers with credit card debt and those buying a new home or car, but it is also expected to trigger a series of interest rate cuts through the end of the year and beyond.

The economy remains the most important issue for voters ahead of the November general election. Economists and experienced Democratic strategists agree that Harris will benefit from the cuts agreed on Wednesday, but they disagree about the magnitude of the political impact.

Mark Hamrick, senior economic analyst at Bankrate, told the Washington Examiner The perception of Harris’ economic leadership will “not change overnight with a rate cut,” but she may expect some recovery when prices fall.

“The reality is that the number of undecideds in this race is not huge, but when you talk about narrow margins, that percentage is significant,” he said in an interview. “The question is, ‘Is the level of interest rates essentially a trigger for perceptions of the quality of the economy?'”

“It’s no secret that the political environment is highly polarized. Anything that has a positive impact on not just how things are perceived but how they actually are is helpful for an incumbent, as long as she is perceived as an incumbent,” Hamrick continued. “The high level of awareness of who she is is supported by things that are changing, because until a few months ago, nobody knew she was a presidential candidate.”

Skanda Amarnath, executive director of Employ America, argues that rate cuts have been in the forecasts for months and that these “assumptions” are already “baked in” to voters’ perceptions of the economy.

He told the Washington Examiner He said Wednesday’s announcement “should not have much political impact,” but acknowledged that “disappointment” from an underwhelming announcement and forecast for the future could be bad news for the vice president.

“All economists and all financial market strategists can tell you the story of how this disappointment leads to falling stock prices and the Fed has to clean up. There is additional volatility in the market,” he explained. “That leads to more reports and stories about recession risks or economic uncertainty, which would probably be a little less favorable to the incumbent.”

Democratic strategists with close ties to Harris’ campaign team gave more direct and political answers to the question of how a rate cut would affect the election.

“I’ve been saying this for years. Biden and Harris’ economic agenda is working, but it takes time to see the effects,” said one strategist.

“This will make it much easier to sell the vice president’s economic agenda to voters,” a second strategist added. “Especially when the other side is focused on cutting taxes for the super-rich and raising costs even further for ordinary American households.”

Any improvement in the public perception of Harris’ economic policies would be welcome news for her election campaign.

Although the Vice President was able to steadily increase her lead over former President Donald Trump in national polls, opinion polls on political parties and the general mood, she lagged far behind the former President among voters when it came to economic management.

Harris’ economic program, the outlines of which she first presented last month, received mixed reviews.

Proposals to cap rents and provide $25,000 in government assistance to first-time home buyers were widely criticized by experts, but their proposal to deduct the tax on the construction of 3 million homes was received positively.

Harris was additionally burdened with both gaining recognition for and distancing herself from President Joe Biden’s unpopular economic policies.

However, immediately after the debate with Trump in September, their economic polls began to change.

A Financial Times– Harris leads her rival by two points on economic management, according to a Michigan Ross Poll released Sunday. That lead widened to six points among respondents who watched all or part of the Trump debate.

A Forbes-A HarrisX poll released Tuesday, conducted in the two days following the debate, found that participants were divided on who demonstrated “a better understanding” of economic policy during the debate, but Harris came out on top when it came to detailing the specifics of the economic proposals.

Only 60 percent of respondents said Trump had provided “no or very little information” about how he would address inflation. Sixty-five percent said the same about his overall economic plan. By comparison, 58 percent and 69 percent wanted to hear more from Harris about inflation and the economy, respectively.

The Harris campaign team did not comment for this story.

Meanwhile, the Trump campaign and its allies claim that Biden and Harris’ agenda is responsible for current inflation and interest rates.

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“Kamalanomics has led to the fastest rise in mortgage rates since 1981, and only President Trump can restore economic growth after four years of failure,” Republican National Committee spokeswoman Anna Kelly told the ^ “Washington Examiner”.

“Kamala Harris wants to continue the same ‘high energy cost’ policies that have created a housing affordability crisis and crippling inflation for families across the country, but President Trump will cut energy prices in half in 12 months and declare a national energy emergency to quickly lower mortgage and interest rates,” she said.