Joe Biden’s upbeat forecasts for the US economy have been validated by the Federal Reserve’s signal that it will consider interest rate cuts next year, delivering respite to American households through lower borrowing costs after two years of high inflation.
For months, Biden administration officials have been betting on a “soft landing” — one in which inflation would decline without any big rise in unemployment or a recession — as a fundamental feature of its economic record heading into the 2024 presidential election.
That expectation was validated by the US central bank this week, as it shifted towards a more dovish posture. The Fed indicated that its cycle of monetary tightening, which began in early 2022 to fight rapidly building inflation, had most likely ended, as officials forecast that its benchmark interest rate would be brought down by 0.75 percentage points next year from its current range of 5.25 per cent to 5.5 per cent.