US Federal Reserve lowers interest: What does that mean for Harris and Trump?

US Federal Reserve lowers interest: What does that mean for Harris and Trump?

In September, the US Federal Reserve's interest rates reduced interest rates-a step that was already expected in financial circles. However, interest reduction by 50 basis points was the biggest step in 2020 and now sets the range to 4.75 to 5.00 percent. This decision was made in response to the falling inflation and the weak location on the US market.

The interest rate reduction comes at a crucial time in the ongoing US election campaign. Kamala Harris, Democrat's presidential candidate, will benefit from this step. According to Klemens Kindermann from Deutschlandfunk, the message of the interest rate that inflation is defeated could influence the mood of voters, especially after Donald Trump had previously criticized the government. Trump had accused the government of leading the United States to one of the highest inflation phases in its history, which could now be put into perspective by the interest rate reduction.

Trump's reaction and its ambitions

Trump's reaction to the interest in the interest rate was immediately because he had already warned the Fed not to reduce interest before the election. He summarized his opinion that this means that the economy is bad or that the central bank acts politically. If Trump gains the choice, he plans to influence monetary policy. "I think the president should at least have a say there," said Trump recently. These statements raise questions about the independence of the FED, especially with regard to his earlier appointment of Jerome Powell as Fed chairman.

In contrast, Kamala Harris emphasizes that she wants to respect the independence of the Fed and will not interfere in its decisions. This could benefit voters who value stability and independence of monetary policy.

forecasts and possible scenarios

The discussion about future interest policy is far from over. According to experts from Lombard Odier, the Fed interest reduction cycle could end in the second quarter of 2025, should Trump win both the presidency and take control of the congress. The Republican program could include inflation -promoting measures that would challenge the influence of the Fed on monetary policy.

Another scenario stipulates that, if he has a split congress, Trump could create a similar situation in which there is still less scope for interest rate cuts. On the other hand, if the Democrats gain the election under Harris, the Fed could continue to reduce interest rates by mid -2025, according to Lombard Odier.

In the near future, the question remains how the Fed's interest rate policy will develop after the elections. At an interest session in September, Jerome Powell had not given a clear requirement for further interest reductions. He emphasized that the FED could react flexibly to market developments and that it was not to be expected that interest rate reductions of this size represent the new standard. This year there are still two interest sessions, and the projections of the FED suggest that it will use the possibilities for further interest rate reduction.