US interest rate cut: 'Welcome news for Americans' says Kamala; Fed 'playing politics', claims Trump

The US Federal Reserve announced a half-percentage-point cut to its key lending rate on Wednesday, marking its first reduction in over four years. This move aims to lower borrowing costs for consumers and businesses ahead of the November election, leading to reactions from both presidential candidates, Kamala Harris and Donald Trump.

Democratic candidate Kamala Harris welcomed the Fed's decision, describing it as "welcome news" for Americans facing high prices. She reiterated her commitment to tackling inflation, saying, "While this announcement is welcome news for Americans who have borne the brunt of high prices, my focus is on the work ahead to keep bringing prices down."

While, Republican candidate Donald Trump raised concerns about the Federal Reserve's motivations. Speaking from a bitcoin bar in New York, he suggested the significant cut indicated a struggling economy. "I guess it shows the economy is very bad to cut it by that much, assuming they're not just playing politics," he said.

The Fed’s decision signals a shift from its previous high-interest rate strategy, aimed at curbing inflation, as price levels begin to ease towards the central bank's long-term target of 2%. This change is especially relevant as inflation and the cost of living remain key issues for voters in the upcoming election.

David Wessel, a senior fellow at Brookings, highlighted the importance of borrowing costs, saying, "We know the expense of borrowing to buy a car or get a mortgage is on top of mind," suggesting that this rate cut could benefit Harris's campaign.

Fed Chair Jerome Powell reaffirmed the independence of the central bank, saying, "We're not serving any politician, any political figure, any cause, any issue, nothing," in response to concerns about political influence over rate decisions.