Biden set to praise US economy after Fed rate cut, but not claim victory

U.S. President Joe Biden will on Thursday highlight progress in reducing inflation and boosting employment following the Federal Reserve’s interest rate cuts, while pledging to continue working to cut costs for American families, his top aides said.

Biden will use 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, his chief of staff, Jeff Zients, told reporters.

Many economists had predicted a recession would be needed to reduce inflation, but they were proven wrong as Biden’s policies aimed at expanding domestic manufacturing, investing in clean energy and other infrastructure, and capping drug costs for seniors helped create 16 million jobs and boost wages, Zients said.

But Biden and Vice President Kamala Harris, the Democratic candidate for the Nov. 5 presidential election, focused on continuing to lower costs and strengthen the economy.

“The president knows that now is not the time to declare victory, and that is why he will talk about the work that remains ahead (…) to strengthen the economy, create more jobs and, most importantly, reduce costs,” Zients stressed to journalists.

National Economic Council Director Lael Brainard said the Federal Reserve’s decision on Wednesday to cut rates for the first time in four years sent a “clear signal that inflation is back on the decline,” noting that inflation was now at the same level seen in the month before the pandemic began.

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

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

The White House is monitoring geopolitical risks, including escalating tensions in the Middle East, but sees no significant risks to the overall economic outlook, a representative said.

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