CNN
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The Federal Reserve cut interest rates for the first time in the Biden era on Wednesday, as the White House grapples with Americans’ discontent over the cost of living over the past three years, raising new questions about the health of the economy and its impact on voters at the ballot box.

The move is another endorsement for President Joe Biden, whose pandemic-era agenda has delivered trillions of dollars in government spending that, combined with strong demand for goods, supply chain issues and Russia’s war with Ukraine, has sent inflation to four-decade highs.

The half-percentage-point cut could signal that the elusive “soft landing” — the experts’ favorite term for raising borrowing costs to slow economic activity while preventing severe unemployment — has been achieved. Biden, who has publicly praised the Fed’s policy independence, is scheduled to speak at the Economic Club of Washington, D.C., on Thursday and is likely to tout an economy that has come full circle in four years.

But the rate cut could also suggest that the economy, which is showing signs of stress, needs a boost. While most mainstream economists agree that a recession is not imminent, they also suggest that the economy is not out of the woods yet.

With Election Day just 50 days away, a new question arises: Will voters care?

Nevada real estate agent Zoila Sanchez told CNN’s John King that lower interest rates would provide welcome relief for residents looking to buy or refinance a home.

“The prices are extremely high, the highest they’ve ever been,” Sanchez told King. “The affordability is not there for regular people.”

Homebuyers taking out mortgages and homeowners refinancing could see their monthly payments fall. That’s already happening: Mortgages are based on bond yields, which have fallen in recent weeks in anticipation of a rate cut. Borrowing for cars and carrying credit card balances will eventually become cheaper, too. And if the Fed pursues a bigger cut, the stock market could soar past the record highs it hit this week, hurting the retirement accounts of Americans with 401(k) plans and the portfolios of the smaller share of Americans who own stocks.

But most economists say the effects will be muted or delayed, pointing to moves the market already made when Powell telegraphed rate cuts in August. Mortgage rates began to fall then. Financial markets reached and remain near record highs.

According to Jason Furman, former chief economist to former President Barack Obama, it could take well into 2025 for spending cuts to lead to broad changes in economic behavior.

“It’s not going to affect much of anything in the economy before Election Day,” Furman told CNN. “It’s already priced into the market and it’s way too early to affect anything like unemployment, GDP or inflation.”

Data from the St. Louis Federal Reserve shows that it takes at least nine months for higher interest rates to shrink economic activity and, in response, lower prices. And it takes about 12 months for lower interest rates to be felt by consumers.

Some historical data shows that voters made up their minds about the economy months ago.

President George H.W. Bush enjoyed 5.8 percent economic growth in the three months leading up to Election Day. But unemployment peaked at a troubling 7.8 percent in June 1992, a concern that—along with Democrat Bill Clinton’s “It’s the economy, stupid” slogan—caused voters to ditch Bush and pick Clinton.

According to Aaron Klein, a senior fellow at the Brookings Institution in economics, some voters have given Vice President Kamala Harris a small boost in the polls because of her handling of the economy, because they don’t want to support Biden or Trump’s policies.

“The most important measure of the share of incumbent voters is how voters felt in April, May and June,” Klein told CNN. “The mindset of voters about the Biden-Harris administration is already baked.”

Yet both parties have shown that they believe lower rates can help consumers — and ultimately voters — who have long struggled with high costs.

Democratic Senators Elizabeth Warren, John Hickenlooper and Sheldon Whitehouse this week called for an even deeper Fed rate cut of three-quarters of a point to stimulate more borrowing. And Biden, who has been at pains to stress the Fed’s independence from the executive branch, said this spring that he believed a rate cut was warranted.

Steve Moore, an economic adviser to former President Donald Trump, said the economy deserves a quarter-percentage point rate cut, but he believes the Fed should have done it sooner.

“They waited three years to do this, so why are they doing it on the eve of the election?”

Several members of Trump’s team believe the central bank is tipping the scales in the race, seeking to stimulate the economy under a Democratic administration to help voters feel better about their finances when they go to the polls.

Powell asked in July whether the Fed could remain apolitical if it cut rates in September. He responded adamantly that it could.

“This is my fourth presidential election at the Fed,” Powell said. “Everything we do before, during or after the election will be based on the data, the outlook and the balance of risks.”

Trump said in an August press conference that he believes the Fed acts on a “gut feeling” and that a president “should have some say” in how the Fed acts. He later walked back that position.

Moore told CNN that Trump doesn’t necessarily want the Fed to be more closely tied to the White House, but he does want more transparency behind the central bank’s decision-making. In a second term, Trump could call for regular audits and real-time disclosures, rather than weeks of delays before closed-door session minutes are released.

“There should be C-SPAN cameras at every meeting,” Moore said.

This story has been updated following the Fed’s rate cut announcement.