Current:Home > ContactPowell: Fed still sees rate cuts this year; election timing won’t affect decision -TradeWise
Powell: Fed still sees rate cuts this year; election timing won’t affect decision
View
Date:2025-04-13 12:05:16
WASHINGTON (AP) — 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.
“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 percent on a sometimes bumpy path.”
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. The Fed will meet and decide whether to cut rates during the peak of the presidential campaign, in July and September.
Though inflation has cooled significantly from its peak, it remains above the Fed’s 2% target. And average prices are still well above their pre-pandemic levels — a source of discontent for many Americans and potentially a threat to President Joe Biden’s re-election bid.
The recent pickup in inflation, though slight, has led some economists to postpone their projections for when the Fed will begin cutting rates. Rate cuts would begin to reverse the 11 rate increases the Fed carried out beginning in March 2022, to fight the worst inflation bout in four decades. They would likely lead, over time, to lower borrowing rates for households and businesses.
Many economists now predict that the central bank’s first rate cut won’t come until July or even later. That expectation has fueled some speculation on Wall Street that the Fed might end up deciding to delay rate cuts until after the presidential election. The Fed’s November meeting will take place Nov. 6-7, immediately after Election Day.
Former President Donald Trump has called Powell “political” for considering rate cuts that Trump has said could benefit Biden and other Democrats. Powell was first nominated to be Fed chair by Trump, who has said that, if he is elected president, he will replace Powell when the Fed chair’s term ends in 2026.
In his speech Wednesday, Powell noted that Congress intended the Fed to be fully independent of politics, with officials serving long terms that don’t coincide with elections.
“This independence,” Powell said, “both enables and requires us to make our monetary policy decisions without consideration of short-term political matters.”
The Fed chair’s remarks follow several reports showing that the economy remains healthy, largely because of solid consumer spending. Yet that strength could make it harder for the Fed to achieve its goal of slowing inflation to its 2% target. 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%.
When they met two weeks ago, Fed officials forecast that they could cut their benchmark rate three times this year. Still, nearly half the 19 policymakers penciled in just two or fewer rate cuts.
veryGood! (7)
Related
- As Trump Enters Office, a Ripe Oil and Gas Target Appears: An Alabama National Forest
- State House Speaker Scott Saiki loses Democratic primary to Kim Coco Iwamoto
- LeBron James was the best player at the Olympics. Shame on the Lakers for wasting his brilliance.
- Post Malone Makes Rare Comments About His Fiancée and 2-Year-Old Daughter
- Scoot flight from Singapore to Wuhan turns back after 'technical issue' detected
- Ana Barbosu Breaks Silence After Her Appeal Leads Jordan Chiles to Lose Her Olympic Bronze Medal
- Olympics highlights: Closing ceremony, Tom Cruise, final medal count and more
- Incarcerated fathers and daughters reunite at a daddy-daughter dance in Netflix documentary
- Cincinnati Bengals quarterback Joe Burrow owns a $3 million Batmobile Tumbler
- Diamond Shruumz recall: FDA reports new hospitalizations, finds illegal substances
Ranking
- Nearly 400 USAID contract employees laid off in wake of Trump's 'stop work' order
- Post Malone Makes Rare Comments About His Fiancée and 2-Year-Old Daughter
- Who performed at the Olympic closing ceremony? Snoop, Dr. Dre, Billie Eilish, Red Hot Chili Peppers
- Tyrese Haliburton jokes about about riding bench for Team USA's gold medal
- The White House is cracking down on overdraft fees
- Travis Scott released with no charges after arrest at Paris hotel, reps say
- Tyrese Haliburton jokes about about riding bench for Team USA's gold medal
- UNC women's soccer coach Anson Dorrance, who won 21 NCAA titles, retires
Recommendation
Why Sean "Diddy" Combs Is Being Given a Laptop in Jail Amid Witness Intimidation Fears
Democrats launch first paid ad campaign for the Harris-Walz ticket in battleground states
After Josh Hall divorce, Christina Hall vows to never 'give away my peace again'
Winners and losers of the 2024 Olympics: Big upsets, failures and joyful moments
San Francisco names street for Associated Press photographer who captured the iconic Iwo Jima photo
Travis Scott released with no charges after arrest at Paris hotel, reps say
'It Ends With Us' drama explained: What's going on between Blake Lively and Justin Baldoni?
18-year-old Iowa murder suspect killed by police in Anaheim, California