The rise in mortgage rates and other borrowing costs is putting pressure on American consumers as the 2024 election approaches, potentially impacting President Biden’s chances for re-election.
Despite the high rates, President Biden has not urged the Federal Reserve, which has raised interest rates to their highest levels in over two decades, to lower them.
While the White House cites the Fed’s independence as a reason for not pressuring them to cut rates, some Democrats are advocating for a change in approach. The Fed’s efforts to combat inflation have hit a roadblock, leading to the expectation that interest rates will remain at 5.3 percent for the foreseeable future.
As voter sentiment is affected by higher rates, Democratic strategists suggest that President Biden should follow former President Trump’s lead in publicly pressuring the Fed to lower rates.
Despite concerns about high rates impacting his re-election prospects, President Biden has refrained from direct pressure on the Fed. His team believes that maintaining the central bank’s independence is crucial for economic stability.
The Fed’s focus on fighting inflation may result in rates staying high for an extended period, despite previous expectations of rate cuts. Investors are adjusting their expectations accordingly, with mortgage rates rising above 7 percent.
Historically, high rates have had political repercussions, impacting re-election attempts by incumbents. While presidents can publicly criticize the Fed, the central bank remains committed to making policy decisions based on economic conditions rather than political pressure.
President Trump’s vocal criticism of the Fed set a precedent for subsequent presidents to comment on monetary policy. However, economists believe that such commentary is unlikely to influence the Fed’s decisions.
Progressives advocating for rate cuts are skeptical of President Biden’s ability to sway the Fed’s policy. They believe that the central bank will prioritize data-driven decision-making over political pressure.
Despite calls for rate cuts, it is uncertain whether President Biden’s efforts to pressure the Fed would be successful or rewarded by voters.
