Federal Reserve Chair Jerome Powell risks clearing the way for Donald Trump to win the presidency in 2024 if he doesn’t immediately start cutting interest rates, a top progressive lawmaker claimed Wednesday.
Ro Khanna, an outspoken California Democrat who has repeatedly blasted Powell over the Fed’s handling of inflation, once again took aim at the top central banker in an X post on Wednesday.
“Powell should cut interest rates now given most of inflation was caused by supply shocks,” wrote Khanna, a member of the Congressional Progressive Caucus.
“If he doesn’t, he may be the person most responsible for the possible return of Trump.”
After a slate of interest rate hikes over the last two years aimed at taming inflation, Fed officials have left rates unchanged at each of their last three meetings.
The stock market rallied this month, with the Dow Jones Industrial Average hitting all-time highs, after Fed officials signaled rates cuts were possible in the coming year — but probably not until the fall, which may be too late to help Biden in November’s presidential battle.
Optimism for imminent cuts cooled earlier this month after New York Federal Reserve President John Williams and Atlanta Fed President Raphael Bostic each indicated that talk to bring down rates was premature.
As an independent federal institution, the Fed is expected to make policy decisions irrespective of which party holds the Oval Office.
Powell — who was named Fed chair by Trump in 2017 and reappointed by Biden in 2021, against the wishes of many progressives == has overseen a steady stream of hikes that has brought the fed rate to a two-decade high of between 5.25% and 5.50%.
However, a “soft landing” from inflation levels that reached four-decade highs may be in reach. The Consumer Price Index showed inflation rose 3.1% in November, the lowest reading since June, but still stubbornly above the Fed’s 2% long-term target for prices.
Despite major legal trouble, Trump is the current frontrunner for the Republican Party’s presidential nomination.
A recent poll showed that another top GOP candidate, the former US Ambassador to the United Nations Nikki Haley, had pulled within four percentage points of Trump among likely Republican voters in New Hampshire.