The US Federal Reserve may lower interest rates as early as September to relieve some pressure on households and businesses. This might be a boost in the upcoming presidential election for Kamala Harris. Mixed signals are coming in from the job market, so everyone’s eye is on the Fed’s next move.

It’s an unexpected fillip that she may get for her US presidential campaign as the campaigns enter the final stretch: the US Federal Reserve. Experts raise expectations that the Fed is set to cut interest rates as early as September. This could help alleviate the financial burden on households and businesses who have been hard hit by record high borrowing costs.

Talk of an interest rate cut comes as Democrats gather in Chicago for their national convention. Wall Street economists are abuzz with predictions that the world’s most influential central bank is on the verge of initiating a series of interest rate cuts before year-end. This would be the first time since March 2020, when the COVID-19 pandemic began, that the Fed has done so.

During the past month, financial markets have taken a perfect rollercoaster ride, with at times a sense of fear in terms of a possible US recession looming large on them. However, a bulk of economists surveyed by Reuters are still optimistic. They do not see an impending downturn and expect the Fed to cut 0.25 percentage points in borrowing costs at each of its remaining meetings this year.

It finds support from recent signals from three regional Federal Reserve banks whose heads have expressed growing readiness for a rate-cutting cycle in order to alleviate the pressure on households and businesses from high borrowing costs.

Minneapolis Federal Reserve President Neel Kashkari said it’s appropriate to discuss cutting interest rates as early as September amid signs of a weakening job market. “The balance of risks has shifted, so the debate about potentially cutting rates in September is an appropriate one to have,” he said in an interview with the Wall Street Journal.

Also, Kashkari’s comments were matched by other Fed officials, including Alberto Musalem, head of the St. Louis Fed, and Raphael Bostic, president of the Atlanta Fed. Their combined remarks moved the markets significantly.

The yields of US government debt fell on Monday as investors began to bet on the rising probability of a Fed rate cut in September. This decline in yields comes just as the US readies for what becomes what should be rigorously contested presidential election between Kamala Harris and Donald Trump on November 5th.

Adding to the anticipation, investors will also look forward to the speech by US Fed Chair Jerome Powell at the central bank’s annual Jackson Hole meetings on Friday. He is due to outline a downward path for interest rates, giving probably further clarity on the Fed’s intentions.

It’s according to trading in financial markets—around 76% for the Fed to cut interest rates by 0.25 percentage points in September. This growing speculation has been added to with regard to the future of the US economy.

Krishna Guha, the vice-chair of Evercore ISI, said: “We expect [Powell] will use his Jackson Hole speech to explain why the Fed is now sufficiently confident inflation is heading back durably to 2% to begin dialing back rates soon – [from] September – and [to] provide a basic framework for the cutting cycle ahead.”.

The possibility of a rate cut comes at the time that the annual US inflation rate dropped below 3% in July, a level not seen since 2021, the potential for much-needed light relief for investors rattled after figures earlier this month showed an unexpectedly sharp slowdown in the US job market—a slowdown that raised new fears of a possible recession in the US.

Weaker-than-expected jobs data earlier this month sent global financial markets into rout, with share prices tumbling on both Wall Street and in London. There were fears that the world’s largest economy was heading for a hard landing.

However, stock markets have since recovered on growing beliefs that the Fed is preparing for its first interest rate cut in more than three years. This move would be viewed as paving the way the economy should take to avoid a hard landing.

The fact of the matter is that head economist at Jefferies, Mohit Kumar, had earlier posited a calming perspective: “We expect Powell to provide a sense of calm to the markets, indicating that the Fed is moving toward a rate cut but there is no need to panic. He’d probably acknowledge the slowdown in the employment picture but indicate that the broader economy still remains resilient.”

with all eyes on the Fed and what it will do next. Will it cut rates this September? What effects will this have on the presidential election and the US economy as a whole? The answers to this could shape the future of the nation in more ways than one.