Biden expects Fed to continue lowering interest rates

President Joe Biden said Thursday he expects the Federal Reserve to continue lowering interest rates, and pledged that his administration will continue working to lower costs for American families.

Biden used an event with the Economic Club of Washington to outline how well the United States has responded to the COVID-19 pandemic and the spike in inflation following Russia’s invasion of Ukraine, issues that have caused voter anxiety and are particularly sensitive ahead of the November presidential election.

“Interest rates are going to come down and are expected to continue to come down. That’s good for us,” the president said.

Inflation is much closer to the Fed’s 2% target, Biden said, calling the central bank’s half-percentage point rate cut on Wednesday “good news for consumers.”

“I’m not here to take a victory lap (…) We have more work to do,” he added.

Many economists had predicted a recession would be needed to reduce inflation, but they were proven wrong as policies aimed at expanding manufacturing, investing in clean energy and limiting drug costs for the elderly helped create 16 million jobs and boost wages, said Chief of Staff Jeff Zients.

National Economic Council Director Lael Brainard said the Fed’s decision sent a “clear signal that inflation has come back down,” noting that price pressures were now at the same level seen in the month before the pandemic began.

According to Brainard, the mortgage rate reductions already seen would save the average home buyer $5,000 a year, with the savings increasing as rates continue to fall. The cut would also save the average new car buyer nearly $1,100 over the life of the loan.

Still, Brainard said more work is needed to reduce housing costs, support child care needs and maintain the gains made for working-class families.

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