Fed chair waits to cut rates

Federal Reserve Chair Jerome Powell said the Fed expects to cut interest rates this year but won't do so until it sees "more good inflation readings" and is more confident about falling prices.

By

National News

March 29, 2024 - 3:23 PM

Federal Reserve Board Chairman Jerome Powell is right to hold the benchmark interest rate steady. (Chip Somodevilla/Getty Images/TNS)

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell on Friday reiterated a message he has sounded in recent weeks: While the Fed expects to cut interest rates this year, it won’t be ready to do so until it sees “more good inflation readings’’ and is more confident that annual price increases are falling toward its 2% target.

Speaking at a conference at the Federal Reserve Bank of San Francisco, Powell said he still expected “inflation to come down on a sometimes bumpy path to 2%.’’ But the central bank’s policymakers, he said, need to see further evidence before they would cut rates for the first time since inflation shot to a four-decade peak two years ago.

The Fed responded to that bout of inflation by aggressively raising its benchmark rate beginning in March 2022. Eventually, it would raise its key rate 11 times to a 23-year high of around 5.4%. The resulting higher borrowing costs helped bring inflation down — from a peak of 9.1% in June 2022 to 3.2% last month. But year-over-year price increases still remain above the Fed’s 2% target.

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