Former Secretary of Labor Alex Acosta told Newsmax on Monday that the timing of the Federal Reserve's interest rate cuts is "disturbing," given its proximity to the general election in November.
"The labor market is clearly slowing down and the Fed has already signaled rate cuts," Acosta said on "National Report." "They signaled rate cuts at the big gathering of bankers in late August. The question is whether it's a quarter percent — I think — or a half percent.
"I should add, it's a little disturbing that the rate cuts are coming right before the election season. The Fed prides itself on being apolitical, but the timing of these cuts is a little bit disturbing."
The Fed is expected to cut rates at its monetary policy meeting Sept. 17-18, just 49 days before the election on Nov. 5.
At the Fed's annual Jackson Hole symposium late last month, Fed Chair Jerome Powell said, "The time has come for policy to adjust."
"The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," he said.
According to Investopedia, the last time the Fed cut interest rates within two months of an election was in 2008, when it slashed them to almost zero during the Great Recession.
The danger in making interest rate cuts during election season is that they could be seen as politically motivated, or designed to help one political party over another.
"If the Fed aggressively cuts its key interest rate, interest rates like mortgage rates, credit card rates and other borrowing rates will likely follow," Mike Walden, an emeritus economics professor at North Carolina State University, wrote in a blog post this year. "More people will be able to buy homes, vehicles and other items, lifting consumer confidence and happiness. And, if people are more confident and happier, they may be more likely to reward incumbent politicians by voting for them."
Jan Hatzius, chief economist at Goldman Sachs, said as much in a commentary, writing that the Fed's Open Market Committee "has an undeniable (if never acknowledged) incentive to avoid initiating cuts in the last two months of a presidential election campaign."
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