Interest rates may stay high for longer. Here’s what it means for the 2024 election – By Max Zahn (ABC News) / May 6, 2024
The Fed has cast doubt over a previous forecast of interest rate cuts.
At the start of 2024, the economy appeared to deliver just about everything President Joe Biden could want: falling inflation, robust growth and a forecast of interest rate cuts at the Federal Reserve that might send economic output even higher.
Since then, however, the sunny outlook has darkened. Inflation has proven stubborn and output has slowed. Perhaps most notably, the Fed has cast doubt over whether rate cuts will arrive after all.
Experts who spoke to ABC News described the delay of interest rate cuts as a challenge for Biden that could make his reelection more difficult. The lack of cuts could weigh on economic output and compound the financial pain of inflation, they noted.
Moreover, if the Fed did cut rates, any benefits would likely take hold beyond Election Day. Those benefits would also be muted since key measures of economic health remain fairly strong, such as the pace of economic expansion and the level of unemployment, experts argued.
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