Powell: Fed still sees rate cuts this year; election timing won’t affect decision

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.

<bsp-list-loadmore data-module="" class=«PageListStandardB» data-gtm-region=«READ MORE» data-gtm-topic=«No Value» data-show-loadmore=«true» data-gtm-modulestyle=«List B»> <bsp-custom-headline custom-headline=«div»> READ MORE </bsp-custom-headline> <bsp-custom-headline custom-headline=«div»> Stock market today: Wall Street edges higher following its worst day in weeks </bsp-custom-headline> <bsp-custom-headline custom-headline=«div»> Workers had little warning as Maryland bridge collapsed, raising concerns over safety and communication