Fed Chair Awaits More Inflation Cooling as Path Proves ‘Bumpy’

Original Article:

Source: Link

Jerome H. Powell, the chair of the Federal Reserve, reiterated on Wednesday that the central bank can take its time before cutting interest rates as inflation fades and economic growth holds up. The central bank chief also used a speech at Stanford to emphasize the Fed’s independence from politics, a relevant message at a time when election season threatens to pull Fed policy into an uncomfortable limelight. This year is a big one for the Fed: After long months of rapid inflation, price increases are finally coming down. That means that central bankers may soon be able to lower interest rates from their highest levels in two decades. The Fed raised rates to 5.3 percent from March 2022 to mid-2023 to cool the economy and bring inflation to heel. Figuring out when and how much to cut interest rates is tricky, though. Inflation has decelerated more slowly in recent months, and the Fed does not want to cut rates too early and fail to fully wrestle price increases under control. Investors had initially expected the Fed to lower rates early this year, but now see the first move coming in June or July as officials wait for more evidence that inflation has truly moderated.