Republican lawmakers are breaking with Donald Trump on the issue of upcoming reductions in interest rates. The former president believes that the Fed should not decrease the policy rates before the presidential elections, an opinion most lawmakers of his party disagree with.
The Fed plans to lower interest rates for the first time in four years, less than two months before the presidential elections, which Trump and many other critics believe could be an election-year tactic.
However, Republicans on Capitol Hill do not share the same view. According to Senator John Kennedy, the labor market has entered dangerous territory and now is the right time for the Fed to lower interest rates.
Republican Congressman Dan Meuser, a firm supporter of Donald Trump, also endorsed the Fed’s move, stating that national interest should be prioritized over politics. Meuser called the declining interest rate a “pro-growth initiative,” adding that this strategy helps drive the economy forward.
Senator Josh Hawley also maintained that he wants the Fed to bring the rates down, stating that these rates were raised due to Biden’s failed economic policies.
Many incumbent Republicans believe lowering rates before the election is necessary, as it could eventually bring unemployment down and help them in their election races.
Trump has previously accused the Fed of supporting Democratic candidates in the election year. In 2016, Trump claimed that then-Fed Chair Janet Yellen lowered interest rates before the elections to help his rival, Hillary Clinton.
The current Fed Chair, Jerome Powell, was nominated by Trump, but he started developing his differences with Powell shortly after appointing him. Trump has indicated he will not fire Powell if he wins the November election and will allow him to complete his term, which is set to end in May 2026.
The former president also advocates for more executive influence in driving the country’s monetary policy. Political insiders suggest that many congressional Republicans may oppose Trump’s efforts to bring the Fed under presidential control during his potential second term.
The Fed is under mounting pressure to lower rates after consistently raising them over the past three years. Recent unemployment reports, showing that unemployment stands at 4.3% compared to 3.5% at the same time last year, are also pressuring the Fed to lower borrowing costs.
Anna Kelly, the RNC spokesperson, stated that Trump plans to lower interest rates as soon as he assumes the presidency. She blamed Vice President Kamala Harris for pushing the US economy into chaos.
The Fed is likely to lower rates by 0.25%, but some Republicans, including Kennedy, are pushing for a larger cut to boost the job market.
However, some GOP lawmakers, like Rep. John Rose, argue that the Fed is acting too soon to lower rates, suggesting that politics could drive the decision.