Are Jay Powell and the Fed going to juice the election-year economy by cutting interest rates? Will the Fed bail out Joe Biden?

You’ve got Democratic senators and House members and various civilians who are calling for the Fed to raise their inflation target to 3 percent from 2 percent.

As that flawed argument goes, a 3 percent target would give the Fed more elbow room to start cutting interest rates.

And, don’t forget that President Biden himself said the day after his bellicose, overcaffeinated State of the Union: “I bet you those rates come down more, because I bet you that that little outfit that sets interest rates is going to come down.” 

So, there you have it. The Big Guy wants a little juice from the Fed to get re-elected. Does Mr. Powell care about Mr. Biden? Well, Mr. Powell’s term as Fed chairman goes to May 2026.

So there’s nothing Mr. Biden can do to him, because Mr. Biden will be retiring in January 2025. And Mr. Powell has indicated that he won’t seek a third term anyway.

And for all the cynical talk about how the Fed somehow must bend to the political whims of the President and his little minions, I actually think Mr. Powell is immune from that kind of thinking. 

Why should the Fed get tangled up in election-year politics? Especially because the actual evidence on inflation does not point to lower Fed interest rates. That’s the important part.

To be sure, the year-on-year inflation has declined to somewhere between 3 and 4 percent  from 9 percent. Even so, the actual level of consumer prices is up over 18 percent during Mr. Biden’s tenure. And that’s driving American families crazy.

Measured from February 2021, groceries are up 21 percent, gasoline up 30 percent, cars up 20 percent, airline fares and transportation services up 34 percent. And those are just a few categories. 

The lagging impact of that 9 percent CPI is going to haunt working folks for years to come. That’s Mr. Biden’s problem. That’s the Achilles’ heel of Bidenomics, Bidenflation, and Biden’s re-election.

A couple of rate cuts by the Fed will not bail Mr. Biden out. And indeed could make things worse. His opponent, President Trump, will tee off on the Fed and Mr. Biden if they start juicing the economy without any economic reason to do so.

Anyway, here are a couple of numbers that should make the Fed think twice about stepping on the accelerator again. Over the past three months, the consumer price index has jumped up 4 percent at an annual rate, twice the Fed’s 2 percent target.

Mr. Powell’s favorite measure — something called “core services excluding rent” — is up 6.9 percent over the past three months. Commodity indexes are starting to jump again, with the Commodity Research Bureau Index up 30 percent since mid-December.

The price of gold has moved to $2,150 from $1,800, a 20 percent increase. And then, think of this: if you had $1,000 and you held it for 20 years, even at a 2 percent inflation rate, your money would shrink by almost a third to $680.

If you took Mr. Biden’s advice and applied a 3 percent inflation target, over twenty years, that $1,000 would drop 44 percent to $560. The point is, even 2 percent inflation is no bargain.

Price stability would be a better idea. And then, on top of that, when you look at Mr. Biden’s new budget, he continues to spend like there’s no tomorrow, boosting inflationary demand.

Plus, he’s taxing everything that moves, which will choke off incentives to produce the supply of goods. When demand outstrips supply, inflation goes higher. Another reason why the Fed should cool its jets.

Of course, there’s always cynicism about the Fed. A couple of Sundays ago on “60 Minutes,” Mr. Powell said, “We do not consider politics in our decisions. We never do and we never will.”

That may not be the last word on this subject, but it’s a brave statement. Anyway, Mr. Biden needs a lot more than a couple of interest rate cuts to bail out his re-election. And you can take that to the bank.

From Mr. Kudlow’s broadcast on Fox Business Network.