“The recent data do not ... materially change the overall picture,” Powell said in a speech at Stanford University, “which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2% on a sometimes bumpy path.”
Powell: Fed still sees rate cuts this year; election timing won't affect decision
By Christopher Rugaber | APApril 3, 2024 at 2:21 p.m. EDTWASHINGTON — Federal Reserve officials will likely reduce their benchmark interest rate later this year, Chair Jerome Powell said Wednesday, despite recent reports showing that the U.S. economy is still strong and that U.S. inflation picked up in January and February.Most Fed officials “see it as likely to be appropriate” to start cutting their key rate “at some point this year,” he added.
In his speech, Powell also sought to dispel any notion that the Fed’s interest-rate decisions might be affected by this year’s presidential election campaign. The Fed will meet and decide whether to cut rates during the peak of the campaign, in July and September.
Fed officials will face a delicate decision during those months and during their upcoming meetings in May and June. The policymakers must take care not to cut rates too soon or inflation could stay high — or even re-accelerate. Annual inflation ticked up in February to 2.5%, according to the central bank’s preferred measure, though that was down sharply from its peak of 7.1%.
Yet if Fed officials wait too long to reduce rates, the current high borrowing costs for mortgages, car loans and business loans could seriously weaken the economy — even tip it into a recession.
