How Will the Presidential Election Influence the Federal Reserve's Interest Rate Decisions?

Predicting the outcome of the USA presidential elections set for November 2024 is a complex task, and the results could swing in multiple directions. Nonetheless, we can explore some significant data points that might influence the electorate and the economy.

Former President Donald Trump has made a firm commitment to increasing deregulation across various industries. This initiative aims to reduce government intervention, potentially spurring business investments and economic growth.

Additionally, Trump has proposed raising tariffs on imports, which could protect domestic industries but might also provoke trade tensions. Should these policies take effect, it’s likely that the Federal Reserve would be compelled to consider increasing interest rates as a measure to combat potential inflation stemming from rising costs.

Conversely, Vice President Kamala Harris has focused on strengthening the labor force, particularly through initiatives that promote access to affordable childcare. By investing in this area, her administration aims to empower more parents, particularly mothers, to join or re-enter the workforce.

If these plans are implemented, the Federal Reserve might opt to keep interest rates unchanged or even reduce them to foster economic growth and support the labor market.

No matter which candidate emerges victorious, forecasts indicate that the USA's economy is poised for steady growth in the coming years. This growth could be underpinned by various factors, including technological advancements, consumer spending, and potential improvements in the labor market. As we approach the election, these differing economic strategies will be pivotal in shaping the country’s future prosperity.