In New Forecasts, Fed Appears to Bow Out of The Election Cycle

• The U.S. Federal Reserve may have just ducked out of the presidential campaign spotlight with a fresh set of forecasts showing no interest rate cuts are likely until after Election Day.
• They issued projections showing greater hesitance than before about starting reductions in high borrowing costs that have made it more costly for Americans to buy anything on credit. This dynamic contributed to consumers' persistently poor view of the economy and Democratic President Joe Biden's management of it.
• As recently as March, Fed officials were forecasting interest rates would fall by 75 basis points this year, an outlook that would have meant cuts beginning this summer and continuing up to the Nov. 5 presidential election. That could have opened the Fed to criticism that it was tilting the scales late in the rematch between Biden and Republican former President Donald Trump.
• Now though, amid stickier-than-expected inflation and a still-strong job market, officials have scrapped that forecast for one with just a single quarter-point cut this year, suggesting no action is likely before their final meeting of the year in December. A delay until after the election could now be a headwind for Biden, who polls show receives low marks for his handling of the economy, despite near-record low unemployment, record-high household wealth and above-trend growth.
(Source: Reuters)