Biden Will Also” Betcha” the Fed Will Cut
Someone should let President Biden know that the Federal Reserve wo n’t grant him a politically expedient rate reduction.
You’ll probably recognize that the leader stated last month that while he could n’t promise a cut in interest charges, he was willing to wager that the Fed would reduce rates.
” I ca n’t guarantee it. But I bet — you betcha — those charges come along more, because I bet you that that little clothing that sets interest charges, it’s going to come down”, Biden said in a March talk in Philadelphia.
The establishment media and economists may have yelled in protest at Donald Trump’s alleged violation of the ostensible rule that the president is not supposed to also appear to be putting pressure on the central bank if he had said these words. But since it was Biden speaking the words, we heard none of those problems. What Trump perceives as beyond the white is slowly accepted by Biden.
This is a concept that is more frequently broken than observed, particularly when the Fed’s plan is tighter than the owner of the White House believes is appropriate, as we pointed out when Trump did officially criticize the Fed, and the establishment media and punditry reacted with shock and horror. Yes, there is a surprising amount of dishonesty and hypocrisy at play in the various reactions from journalists and experts, but that’s not exactly new to anyone.
A lot of Wall Street analysts and economists were sent back to their spreadsheets and whiteboards by the stronger-than-expected increase in the consumer price index ( CPI ) for March. The almost universally accepted notions that the Fed did cut interest rates in June were presently blatantly incorrect. Almost every Wall Street analyst had a forecast for a June minimize at one point.
That’s all changed. The futures market currently suggests there wo n’t be a cut until September, which is not all that is certain to be. Michael Gapen, the head of the U.S. economics staff at Bank of America, quickly released their estimates for a rate cut that would start as early as June. The rest of Wall Street will undoubtedly following.
Never Biden. He keeps coming up with his estimates for future budget breaks.
” Well, I do have by my projection that, before the year is out, there’ll be a charge cut”, Biden said Wednesday at a White House press conference.
You have to know if Fumio Kishida, the prime minister of Japan, who was standing near as Biden made his projection, had to suppress a laugh at Biden’s trust in this. The lawmakers in Japan are better off than to pressure central bank into putting together monetary policy in the interests of the country.

On April 10, 2024, President Joe Biden ( right ) and Japanese Prime Minister Fumio Kishida arrive in Washington, DC for a joint press conference in the Rose Garden. ( Andrew Harnik/Getty Images )
The Data Screaming No Cuts This Time
It’s unclear whether Biden comprehends how much the prices picture has changed because the Oval Office can be a very isolating area. His financial experts may not be able to convey the cold truths in a language that the leader you understand. He will undoubtedly not been learning if he relies on, let’s say, Paul Krugman’s writings, who as far as we are aware also claim that inflation was temporary after all.
Perhaps he can get a version of Breitbart Business Digest through bring. We’ve been highlighting for a while that cpi stopped dropping next year, just as the Fed stopped raising interest rates and started making hints that a price cut was on the horizon. This was not a fluke. While economic policy is tightened by rate cuts, holding costs steady while indicating lower rates are on the horizon is an easing measure. The Fed’s workforce of economics has erred in ignoring this.
If you spoke to a mortgage broker or real estate agent sometime in the last nine times, you probably heard that the time was right to purchase a home despite the still-high loan rates. The idea is that you could refinance into a more economical loan quickly enough since rates may become dropping. If you waited until prices really dropped, home prices would perhaps be rising, sometimes pricing you out of the business.
The same logic works with business expansions. If businesses anticipate rate increases, they are willing to fund projects at higher rates right away because they want to refinance at a lower rate. The current rate is therefore less restrictive than it would otherwise be because of the expectation of lower rates.
The perception that rate cuts are coming soon has not been influenced by the facts regarding prices. Core inflation, as measured by the consumer price index ( CPI), rose by 4.5 percent annualized in the first quarter, up from 3.3 percent at the end of last year. The personal consumption expenditure price index has increased in response to lower housing prices than the CPI, which is largely due to a lower housing weighting. The three-month annualized PCE inflation rate is likely to be 3.9 % or 4.9 % when the March numbers are released later this month based on what we saw in CPI Wednesday and the producer price index on Thursday.

The closing prices for April 10, 2024 are displayed on a board on the New York Stock Exchange’s floor. Following the release of the most recent inflation data, stocks fell across the board. ( Spencer Platt/Getty Images )
Even the most dovish members of the Federal Open Market Committee wo n’t start cutting as inflation has been rising and exceeding the target. That’s especially true when unemployment has been falling since the Fed’s longer-run outlook for years. Given that we have n’t had unemployment this low in a long time since we were drafting young men and sending them to fight the communists in Southeast Asia, why is it necessary to cut?
Biden’s Election Message Crushed by Inflation’s Resurgence
Due to high interest rates, Biden is desperate for the Fed to cut, which would undermine his re-election campaign pitch. A rate cut would represent a victory over inflation, something that Biden has repeatedly declared before being humiliated by a resurgence in price pressures. In addition, lower rates could potentially encourage the affordability of homes, cars, and other items, thereby entice the public to pay less attention to how Biden controls the economy.
Biden’s timing is off. Even if the Fed were to decide that it might be able to cut as early as September, which is unlikely given the magnitude of the second quarter’s inflation, it would likely be impossible to implement the first cut on the eve of the election. Waiting until after the election would not result in much loss, and doing so would put a lot of people at risk. Biden’s public stance on the Fed’s decision to cut may even be worse because it runs the risk of making the impression that the change will be made at the president’s behest.
As we’ve said before, there’s a non- zero chance that the Fed’s next move is a rate increase. And the chances of a raise are increasing.
In a speech this week, Fed Governor Michelle Bowman stated,” While it is not my baseline outlook, I continue to see the possibility that we may need to increase the policy rate further if inflation stalls or even reverses.”
There’s no cut coming before the election. Biden’s insistent assertion that there is only serves to make him appear more out of touch with reality.