‘US Consumers need rate cuts’

The US Federal Reserve is facing more pressure to cut interest rates. Brian Moynihan, CEO of the Bank of America warned on Sunday that without cuts soon US consumers are going to become ‘dispirited’.

The Fed’s decision to hold the rate in the 5.25% to 5.50% range has faced criticism after the markets spiraled due to fears of a US recession. While there have been indications that a cut will be coming in September if the report on inflation shows positive progress, many critics say this is not soon enough.

‘Once the American consumer really starts going very negative, then it’s hard to get them back’, Moynihan told CBS.

Moynihan was also quick to dismiss Republican candidate Donald Trump’s suggestion that the president should have a say in the Fed’s decision-making, saying it was Jerome Powell (the chair of the Federal Reserve) to decide what to do.

‘If you look around the world economies and you where central banks are independent and operate freely, they tend to fare better than the ones that don’t.’

Meanwhile, current President Biden has announced the ‘Time is Money’ initiative aimed at helping consumers by tackling complicated customer service procedures that cost them money. Including subscription canceling, insurance claims, and the number of live customer service agents, the program is aimed at increasing voters' confidence in the democratic party. Polls show that inflation concerns have dented Democratic support and Democratic candidate Kamala Harris is having to address the issue on the campaign trail.

Neera Tanden, domestic policy adviser, outlined the plans saying that current procedures that might take 45 minutes to cancel a subscription need to be stopped.

‘These seemingly small inconveniences don’t happen by accident and have huge financial consequences.’

She outlined actions across multiple departments. The Federal Trade Commission will be looking at how to make cancelling subscriptions as simple as signing up, while the Federal Communications Commission is looking at implementing similar plans for cable, broadband, and cellphone service. Meanwhile, the Labor and Health and Human Services departments will contact healthcare companies and insurers to push them to move all their forms online. There are also plans to tackle the ‘doom loop’ on phone services to ensure it only takes a single button to reach a real person and the Consumer Financial Protection Bureau is going after the banks’ ‘time-wasting chatbots’.  

Tanden made it clear this was not about naming and shaming specific companies but rather improving consumer experience in general. However, the measures may prove controversial with Business chiefs already sensitive to what they see as Democratic efforts to overregulate industry. It’s a stark contrast to Trump’s campaign pledge to relieve regulatory burdens.

Whether these measures have any real impact on consumer confidence is questionable, with all eyes still on the Fed to see if interest rates do come down in September.

(Sources: reuters.com)