But there are pitfalls for the US central bank. Powell’s surprising pivot risks fanning suspicions that he’s deliberately trying to give Biden a boost in his expected re-match with Donald Trump. The Fed chief said on Dec 13 that the Fed doesn’t take politics into account in making policy.
Federal Reserve Chair Jerome Powell’s pivot toward interest-rate cuts is spreading holiday cheer in the White House, where the improved prospects for an economic soft landing are a boon for President Joe Biden’s bid for another term.
Biden has seen his poll numbers sag amid voter anxiety over a surge in the cost of living, and he would face a bigger headwind to winning another term in November if the US tumbled into a recession. As top aides continue to tout the strength of the economy — including low unemployment, easing price pressures and sturdy growth — falling rates would bolster his case to voters.
