The move “reflects confidence on the part of the Fed that inflation has eased and is on track toward the 2% (annual) target, and risks to inflation have significantly diminished,” Yellen said at an event in Washington.
“At the same time, we have a labor market that remains strong,” added the Treasury Secretary, who believes the U.S. economy is experiencing a soft landing, meaning inflation is slowing without a recession.
On Wednesday, following the Fed’s announcement, Republican presidential hopeful for the November 5 election, former President Donald Trump (2017-2021), suggested that the Fed was engaging in politics with its decision.
“I think it shows that the economy is in too bad a shape to cut that much, assuming they’re not playing politics,” Trump said in televised comments from New York. “The economy must be in too bad a shape or they’re playing politics. One thing or the other. But it was a big cut.”
The tycoon is a staunch supporter of low rates.
Her Democratic rival, Vice President Kamala Harris, called the announcement “good news for Americans,” while the White House said the economy was in a “moment of progress.”
The central bank’s decision makes credit cheaper for individuals and businesses, which is good news for the Biden administration and for Harris just before the election.
Fed Chairman Jerome Powell told a news conference: “We are not serving any politician, any political figure, any cause.”
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