Is it time to cut interest rates? Fed meeting live updates
USA TodaySEP 22 2024
US Fed Cuts Interest Rates By Half a Point
Above: Fed Chair Jerome Powell on Sept. 18, 2024 announces an interest rate cut. Image copyright: Anna Moneymaker/Staff/Getty Images News via Getty Images
The Facts
The US Federal Reserve on Wednesday cut benchmark interest rates by half a percentage point to the 4.75% to 5% range in the face of softening inflation and a potential slowdown in the labor market.
This marks the first time the central bank has lowered rates by as much as half a point since 2008, excluding the emergency rate cuts made during the COVID pandemic.
From July 2023, interest rates had been at their highest since 2001 at around 5.25% to 5.5% while the Fed waited for inflation to get closer to its 2% goal. After peaking at around 9% two years ago, Inflation slowed to 2.5% from a year earlier this August.
The Spin
Democratic narrative
The Biden-Harris economy is well on its way to a full recovery. The Fed needed to normalize interest rates after their huge fall, and this rate cut will help the economy stick the landing and avoid a recession. This should sway more voters away from former Pres. Donald Trump to VP Kamala Harris.
Republican narrative
Aside from the Fed breaking tradition by cutting rates so close to Election Day — possibly influencing its outcome — this giant cut actually shows how poorly the Biden-Harris economy is doing. The economy needed this jolt just to show any sign of life, but it's not enough to help the average American.