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.
Federal Reserve chair Jerome Powell speaks during a news conference the Federal Reserve in Washington, March 20, 2024.
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.
The combination of sturdy growth and decelerating inflation has raised hopes that the Fed is engineering a “soft landing” - taming inflation without causing a recession. The central bank has signaled that it expects to reverse policy and cut rates three times this year.
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