US President Joe Biden predicts that the Federal Reserve will take interest rate cuts as he places greater emphasis on housing costs in his election rematch with Donald Trump.
He recently said, "I can't guarantee it. But I bet interest rates will drop even more because I bet that the small institution that sets the interest rate (the Federal Reserve) will lower it." He didn't specify when he thinks the rate cut may start.
According to the CME Federal Reserve observation tool. The market currently generally expects the first rate cut by the Federal Reserve to occur in June.
During this week's yield hearing, Powell told lawmakers that officials are "not far" from gaining enough confidence to believe they can start cutting interest rates, which strengthens expectations for rate cuts in the coming months.
The employment report released on Friday shows that the job market is gradually slowing down, with employment and wage growth slowing down, which raises hopes that the economy will continue to grow without triggering a new round of inflation. This situation gives the Federal Reserve room to lower interest rates.
According to data from the US Bureau of Labor Statistics, the number of non farm workers increased by 275000 in February, once again exceeding expectations of 200000. The number of employed people in January significantly decreased from the previous 353000 to 229000. At the same time, the unemployment rate rose from 3.7% in January to 3.9%. This marks the first time in four months that the unemployment rate has risen and is currently at its highest level in the past two years.
Dakota Wealth analyst Robert Pavlik stated that the most eye-catching increase in the February non-farm report was the unemployment rate rising from 3.7% to 3.9%. A higher unemployment rate means that the economy is slowing down, and in the market's view, it will be necessary to lower interest rates as soon as possible.
Traditionally, the White House does not comment on the decisions of the Federal Reserve, and Biden has previously promised to respect the Fed's independence. However, Biden changed this precedent in December last year, when he stated that strong employment data and continuously cooling inflation were creating the "best time" for the Federal Reserve to stop further interest rate hikes.
Biden called for new measures to expand housing supply in his State of the Union speech on Thursday, hoping to face strong protests from voters about the cost of living. In this speech, he also predicted that interest rates would decrease and called for a monthly tax credit of $400 for new homebuyers to offset the cost of rising mortgage rates.
"Mortgage interest rates will also decrease, and the Federal Reserve acknowledges this," he said.