Federal Reserve slashing rates ahead of Election Day would likely just superficially boost US wallets: experts

foxbusiness.com:

Fox Business White House correspondent Edward Lawrence has the latest on the unanimous decision to hold rates steady at 5.25 on 'Making Money.'

The Federal Reserve is anticipated to slash interest rates this year ahead of Election Day, which will likely lead to a superficial boost to Americans feeling wealthier ahead of casting their votes, though the cuts would have detrimental effects in the long run, experts say. 

«I think superficial is exactly the key because one of the things that happens when you cut interest rates is that you do get a temporary boost to the economy driven by an ease of access in terms of debt. So a lot of Americans right now, they can't afford today's punishingly high home prices, with today's punishingly high interest rates,» EJ Antoni, research fellow in The Heritage Foundation's Grover M. Hermann Center for the Federal Budget, told Fox News Digital in a phone interview. 

«But if you allow interest rates to drop very quickly, then it's going to take time for home prices to ramp up to counteract, essentially, that interest rate hike. So you get this temporary effect where Americans will feel wealthier because they're able to spend more. Now, they're spending outside of their means and the long-run effects of that are going to be very detrimental, but in the short run it feels great,» he continued. 

The Federal Reserve is widely anticipated to cut rates this year during two of its four meetings, which President Biden’s campaign could point to as evidence inflation is slowing and boost confidence among voters in the economy. 

FED LEAVES INTEREST RATES UNCHANGED, SAYS THREE CUTS STILL PLANNED

President Biden speaks at the Pieper-Hillside Boys & Girls Club in Milwaukee, Wisconsin, on March 13,