Topline
This week’s big interest rate cuts will have no discernible influence on the outcome of November’s presidential election, the head of the U.S.’ largest bank asserted Friday, despite an embrace from Democrats and assertions from former President Donald Trump and his allies that the rate decision from the Federal Reserve had political motivations.
JPMorgan Chase CEO Jamie Dimon speaks on stage during “The State of the Global Economy” panel at The … [+]
Key Facts
The Fed announcing its first rate cut since March 2020 “has almost no effect on the election,” JPMorgan Chase CEO Jamie Dimon told The Atlantic in a moderated Friday morning panel, referring to the Fed’s decision Wednesday to lower the federal funds rate by 0.5 percentage points, opting for the more growth-friendly, bigger cut than the 0.25 percentage-point cut forecasted by many economists.
This week’s move from the U.S. central bank, which came following the Fed’s policy-setting panel’s final meeting before November’s election, is a “minor thing” considering the market already heavily anticipated a series of rate cuts in coming months, Dimon asserted.
And in terms of broader effects, Dimon asserted “only 5%” of Americans surveyed would “know about” the rate cuts, a perhaps dubious proclamation considering most polls find the economy is voters’ top issue this fall, and interest rate decisions have a sizable impact on the economy as they typically jolt hiring.
What Have Trump And Harris Said About Rate Cuts?
In a Wednesday press release, Vice President Kamala Harris, the Democratic’ presidential nominee, celebrated the Fed’s cut as “welcome news for Americans.” On Thursday, President Joe Biden called the decision “good news” and a “declaration of progress” against inflation, which raged to a 41-year high in 2022, causing the Fed to hike rights from historic lows. Experts have long expected the Fed, which makes monetary policy independent of elected branches of the government, to lower rates this year, but Trump told Bloomberg in June the Fed “know they shouldn’t” cut rates before the election. Trump struck a similar tune after the Fed made its cut official, accusing the Fed of potentially “playing politics,” while his vice presidential pick, J.D. Vance, appeared Wednesday to swipe at the Fed for making its decision “in the midst of an election.”
Key Background
JPMorgan is by far the largest American bank, as its $3.5 trillion in assets were nearly $1 trillion more than the next largest bank as of June 30, according to the Fed, while JPMorgan’s nearly $600 billion market capitalization is almost twice as much as the next most valuable U.S. bank, Bank of America, with a roughly $310 billion market cap. Dimon, who is worth $2.3 billion as of Forbes’ latest estimates, thanks mostly to his stake in JPMorgan, briefly served as a policy advisor to Trump in 2017 but quickly parted ways, later declaring he is “smarter” than Trump. Dimon was floated in 2012 as a candidate for treasury secretary in the Obama administration, and Trump himself told Bloomberg earlier this year he “would consider” Dimon for the same post should he win the election, though Trump denied ever making the comments.
Crucial Quote
This presidential election may be more “consequential in the short run” for the economy than prior votes, theorized Dimon. Both Harris in “price gouging” bans and Trump in aggressive tariffs have endorsed policies critics panned as negative growth drivers.
