Current:Home > NewsPowell says Fed will likely cut rates cautiously given persistent inflation pressures -ForexStream
Powell says Fed will likely cut rates cautiously given persistent inflation pressures
View
Date:2025-04-16 15:49:20
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.
The Fed’s benchmark interest rate tends to influence borrowing rates across the economy, including for mortgages, auto loans and credit cards. Other factors, though, can also push up longer-term rates, notably expectations for inflation and economic growth.
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.
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.”
Other Fed officials have also recently expressed uncertainty about how much more they can cut rates, given the economy’s steady growth and the apparent stickiness of inflation.
As measured by the central bank’s preferred inflation gauge, so-called core prices, which exclude volatile food and energy costs, have been stuck in the high 2% range for five months.
On Wednesday, Lorie Logan, president of the Fed’s Dallas branch, said it was not clear how much more the Fed should cut its key short-term rate.
“If we cut too far ... inflation could reaccelerate and the (Fed) could need to reverse direction,” Logan said. “I believe it’s best to proceed with caution.”
veryGood! (2564)
Related
- 'Squid Game' without subtitles? Duolingo, Netflix encourage fans to learn Korean
- How Solar Panels on a Church Rooftop Broke the Law in N.C.
- Congress Extends Tax Breaks for Clean Energy — and Carbon Capture
- How 90 Day Fiancé's Kenny and Armando Helped Their Family Embrace Their Love Story
- B.A. Parker is learning the banjo
- Check Out the Most Surprising Celeb Transformations of the Week
- Supreme Court blocks student loan forgiveness plan, dealing blow to Biden
- As Wildfire Smoke Blots Out the Sun in Northern California, Many Ask: ‘Where Are the Birds?’
- Trump suggestion that Egypt, Jordan absorb Palestinians from Gaza draws rejections, confusion
- Migrant boat disaster: What to know about the tragedy off the coast of Greece
Ranking
- Federal court filings allege official committed perjury in lawsuit tied to Louisiana grain terminal
- In West Texas Where Wind Power Means Jobs, Climate Talk Is Beside the Point
- Michigan Tribe Aims to Block Enbridge Pipeline Spill Settlement
- Has the Ascend Nylon Plant in Florida Cut Its Greenhouse Gas Emissions, as Promised? A Customer Wants to Know
- Juan Soto to be introduced by Mets at Citi Field after striking record $765 million, 15
- Activists Gird for a Bigger Battle Over Oil and Fumes from a Port City’s Tank Farms
- Jet Tila’s Father’s Day Gift Ideas Are Great for Dads Who Love Cooking
- How Much Does Climate Change Cost? Biden Raises Carbon’s Dollar Value, but Not by Nearly Enough, Some Say
Recommendation
Intel's stock did something it hasn't done since 2022
The Warming Climates of the Arctic and the Tropics Squeeze the Mid-latitudes, Where Most People Live
Read full text of Supreme Court student loan forgiveness decision striking down Biden's debt cancellation plan
Florida police say they broke up drug ring selling fentanyl and xylazine
Sam Taylor
BP’s Selling Off Its Alaska Oil Assets. The Buyer Has a History of Safety Violations.
On the Frontlines of a Warming World, 925 Million Undernourished People
This And Just Like That Star Also Just Learned About Kim Cattrall's Season 2 Cameo