Chair Jerome Powell is likely to underscore at a news conference Wednesday that the policymakers will need to see several more months of low inflation readings before they would consider reducing their key rate.
Friday’s report also showed that income growth slowed and spending cooled sharply in April, a trend that could help moderate economic growth and inflation in the coming months.
The latest snapshot comes as the Federal Reserve is grappling with inflation data that continues to surprise them.
The Federal Reserve’s more cautious outlook stems from three months of data that pointed to chronic inflation pressures and robust consumer spending.
A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon.
Since the start of the year, Federal Reserve Chair Jerome Powell and his colleagues had said they were looking for more assurance that inflation was ticking steadily down. Instead, they’ve gotten the opposite.
The March figures, the third straight month of inflation readings well above the Fed’s 2% target, provide concerning evidence that inflation is stuck at an elevated level after having steadily dropped in the second half of 2023.
Federal Reserve Chair Jerome Powell said the economy’s strength means the Fed isn’t under pressure to cut rates and can wait to see how the inflation numbers come in.
The financial markets cheered the message Wednesday from Jerome Powell and the Federal Reserve, with traders sending the Dow Jones industrial average surging 1%, to another all-time high.
A key question for Federal Reserve Chair Jerome Powell and the 18 other officials on the Fed’s interest-rate-setting committee is how—or whether—recent inflation figures have altered their timetable for cutting rates.
In his remarks to Congress on Wednesday, Federal Reserve Chair Jerome Powell offered no hints on the potential timing of rate cuts.
In minutes from the Jan. 30-31 meeting released Wednesday, most Fed officials said they were worried about moving too fast to cut their benchmark interest rate before it was clear that inflation was sustainably returning to their 2% target.
Federal Reserve Chair Jerome Powell said in an interview broadcast Sunday night that the Federal Reserve remains on track to cut interest rates three times this year.
The Federal Reserve indicated Wednesday that it’s nearing a long-awaited shift toward cutting interest rates, a sign that its officials have grown confident that they’re close to fully taming inflation.
The average rate on a 30-year mortgage rose to 6.66% from 6.62% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.33%.
Officials “reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably.”
The markets have been on a celebratory tear in recent weeks, as signs pile up that the Federal Reserve may be done raising interest rates.
The Fed’s quarterly economic projections showed that its officials envision a “soft landing” for the economy, in which inflation would continue its decline toward the central bank’s 2% target without causing a steep downturn.
Wednesday’s report reinforced the belief that inflation pressures are cooling across the economy.
When its latest policy meeting ends Wednesday, the Federal Reserve is likely to provide some highly anticipated hints about the extent of rate cuts next year.
