Federal Reserve Chair Jerome Powell says rate cuts ‘will take longer than previously expected’ after interest rate meeting

Federal Reserve Chairman Jerome Powell acknowledged Wednesday that the central bank is delaying plans to cut interest rates because inflation has plateaued well above the central bank’s target.

The Federal Open Market Committee (FOMC), the central bank committee tasked with setting monetary policy, voted on Wednesday to keep the federal funds rate in the range of 5.25% to 5.5%, where it has been since July. The FOMC cited a “lack of further progress” toward achieving its 2% inflation target.

“It’s likely that it will take longer than previously anticipated to gain this much confidence,” Powell told reporters.

The Fed signaled late last year that it would begin cutting rates in 2024, but traders now expect the first rate cut won’t occur until at least November, according to the paper. CME FedWatch Tools.

Powell said that while the next policy move was unlikely to be a rate hike, the central bank was “committed to and intends to maintain its current restrictive policy stance for as long as appropriate.” Ta.

A series of strong economic data has weakened the central bank’s confidence that inflation is on track to reach the Fed’s 2% target. Inflation rose 3.5% in March from a year earlier, up slightly since the start of the year, according to the latest Consumer Price Index (CPI) readings.

Although the U.S. labor market is performing well, with 303,000 jobs added in March and consecutive sub-4 unemployment rates not seen since the 1960s, economic growth in the first quarter of this year was It was less than expected.

“The signals we’re receiving are that it’s likely going to take more time to have confidence that we’re on a sustainable path to 2% inflation,” Powell said. He added, “Clearly restrictive monetary policy needs more time to take effect.” “

As the 2024 election approaches, pressure on Mr. Powell and the central bank is mounting. Progressive Democrats are pressuring Powell to cut rates, and former President Trump has suggested lowering rates to help Democrats in the 2024 election, as the Republican chairman for life whom he appointed during his term in office.

The Wall Street Journal reported last week that Trump’s allies may also be planning to undermine the central bank’s independence if he wins the November election. The Trump campaign said the plan should not be considered an official position, but the Fed and its lack of control over its influence on interest rates was a source of anxiety for the former president.

“Read all the records and see if anyone mentions the disputed election in any way. That’s not part of our thinking. That’s not what we’re hired to do. . . . If we start down that path, I don’t know how to stop it again,” Powell said.

Updated at 3:38 p.m. EDT.