Powell says Fed will likely cut rates cautiously given persistent inflation pressures

WASHINGTON (AP) — Chair Jerome Powell said Thursday that the Federal Reserve will likely cut its key interest rate slowly and deliberately in the coming months, in part because inflation has shown signs of persistence and the Fed’s officials want to see where it heads next.

Powell, in prepared remarks for a speech in Dallas, said that inflation is edging closer to the Fed’s 2% target, “but it is not there yet.”

At the same time, he said, the economy is strong, and the Fed’s policymakers can take time to monitor the path of inflation.

“The economy is not sending any signals that we need to be in a hurry to lower rates,” the Fed chair said. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

Economists expect the Fed to announce another quarter-point rate cut in December, after a quarter-point reduction last week and half-point cut in September.

But the Fed’s steps after that are much less clear. In September, the central bank’s officials collectively signaled that they envisioned cutting their key rate four times in 2025. Wall Street traders, though, now expect just two Fed rate reductions, according to futures pricing tracked by CME FedWatch.

Donald Trump’s presidential election victory has sent yields on Treasury securities higher. It is a sign that investors expect faster growth next year as well as potentially larger budget deficits and even higher inflation should Trump impose widespread tariffs and mass deportations of migrants as he has promised.

See also  2 striking teacher unions in Massachusetts face growing fines for refusing to return to classroom

In his remarks Thursday, Powell suggested that inflation may remain stuck somewhat above the Fed’s target in the coming months. But he reiterated that inflation should eventually decline further, “albeit on a sometimes bumpy path.”

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Note: Thank you for visiting our website! We strive to keep you informed with the latest updates based on expected timelines, although please note that we are not affiliated with any official bodies. Our team is committed to ensuring accuracy and transparency in our reporting, verifying all information before publication. We aim to bring you reliable news, and if you have any questions or concerns about our content, feel free to reach out to us via email. We appreciate your trust and support!

Leave a Reply

Your email address will not be published. Required fields are marked *