By holding rates high, the Fed is hurting Biden’s re-election chances

Federal Reserve Chairman Jerome Powell speaks after President Joe Biden announced Powell's nomination to continue as chair of Federal Reserve chair, on the White House grounds in Washington on Nov. 22, 2021.Democrats are growing increasingly worried that the interest-rate cuts they had been counting on to boost their party’s electoral prospects may not materialize before Americans go to the polls in November.

Despite buoyant growth, declining inflation and near-record low unemployment, barely one-third of Americans approve of Mr. Biden’s handling of the economy, according to areleased on Sunday. Worse still for Mr. Biden, two-thirds of voters said the economy was “extremely important to their vote for president,” a steep rise from 40 per cent in early 2020. The poll of 1,212 voters had a margin of error of 3.4 per cent 19 times of 20.

Mr. Trump nominated Mr. Powell for the top job at the Fed in late 2017, after refusing to name then-Fed chairwoman Janet Yellen to a second term and criticizing the Fed’s moves to nudge interest rates higher on her watch. But Mr. Trump soon began to criticize his own appointee for holding rates too high – until the COVID-19 pandemic drove rates to nearly zero.

Any attempt by Mr. Trump to reduce the Fed’s independence would likely face stiff resistance in Congress. While the president nominates Fed governors, and picks its chair, the Senate must confirm those nominations before they become effective. And even most GOP senators strongly support the principle of Fed independence.

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