Fed Cuts Prime Rate 0.25%; Trump Pivots to "Make America Affordable Again"

A big reason for the loss of support from independents is the persistent Biden inflation and not-yet-hot economy.

The Fed is resisting actually boosting the economy, making the smallest possible reductions in the prime lending rate incrementally to have the smallest possible positive impact on the economy.

Remember, Powell cut interest rates shortly before the 2024 election despite still out-of-control inflation.

The Federal Reserve on Wednesday announced its third interest rate cut of the year as policymakers moved forward with the cut to support the labor market despite elevated inflation.

Fed policymakers voted to lower the benchmark federal funds rate by 25 basis points to a new range of 3.5% to 3.75%. The move follows rate cuts of that size in September and October, which were the first of the year.

Policymakers have been tracking economic data showing a slowdown in the labor market in recent months as companies adjust to shifts in trade and immigration policy. Meanwhile, inflation has trended higher as tariff-related price hikes filter through the economy.

Those dynamics have put the Fed in a difficult spot as it looks to fulfill its dual mandate goals of stable prices in line with the 2% long-run target for inflation as well as promoting maximum employment.

Trump has sensed the dissatisfaction and the complaint that he's too focused on foreign policy. He's now on tour pushing his Make America Affordable Again agenda.

President Trump began his affordability tour in northeastern Pennsylvania on Tuesday, telling supporters he's focused on one thing -- driving prices down nationwide. Steering clear of insider chatter about political fallout or what the pundits say Republicans "should" be worried about, Trump framed the stop as the opening salvo of a national push to restore economic sanity.

"I have no higher priority than making America affordable again," he told supporters, hammering Democrats for driving prices higher and insisting his policies are already reversing the trend. "They caused the high prices, and we're bringing them down. It's a simple message."

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On energy, Trump pointed to what he called "the greatest amount of drilling" and fuel production the country has seen in years -- a supply boost he credits for driving oil prices down. "When energy comes down, your other prices come down," he said, arguing that lower fuel and shipping costs ripple across grocery aisles, construction, and manufacturing.

Trump also previewed what he cast as immediate relief coming on January 1, when key provisions from his Big Beautiful Bill take effect. "We're putting thousands of dollars in the pockets of hard-working Pennsylvanians," he said. "No tax on tips, no tax on overtime, no tax on Social Security for our great seniors."

He blasted the "four years of disaster" under the Biden administration, reminding the crowd that inflation hit 9.1% on Biden's watch and insisting that Democrats have no credibility lecturing anyone about affordability. "When Biden and congressional Democrats had power, they blew up our economy, sent prices soaring," he said. "Now they want to take us right back to Bidenomics."

He also got the UK to drop artificial drug price controls, which will allow him in turn to reduce tariffs on imported British drugs, thus reducing some drug prices in America.

Under the terms of the deal, the U.K. will relax its artificial drug price controls, and in return the U.S. will refrain from imposing tariffs on British medicines, pharmaceutical ingredients and medical devices. That constitutes a win/win for both nations.

For decades, America has led the world in drug innovation, accounting for approximately two-thirds of all new medicines introduced to the world annually. That's the direct result of our greater emphasis on free markets and protection of intellectual property (IP) -- patents, copyrights, trademarks and trade secrets -- compared to the rest of the world.

Unfortunately, over time that has cultivated a "free rider" problem vis-a-vis the rest of the world.

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Simply put, for too long Americans have disproportionately subsidized the world's drug innovation pipeline.

The rule is that the public forms its final opinions about the economy six months before an election. Trump doesn't have much time to change the public's mind about the economy in time for November 2026.

posted by Ace at 05:10 PM

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