Powell may hint whether Federal Reserve is edging close to rate cuts

Two weeks ago, Chair Jerome Powell suggested that the Federal Reserve was"not far" from gaining the confidence it needed that inflation was headed sustainably toward its 2% target level, which would allow it to start cutting its benchmark interest rate.

A key question for Powell and the 18 other officials on the Fed's interest-rate-setting committee is how — or whether — those figures have altered their timetable for cutting rates. Powell will surely be pressed on the topic at a news conference Wednesday after the Fed ends its latest two-day meeting. The central bank's policymakers will also issue their updated quarterly projections for how they foresee the economy and interest rates changing in the months and years ahead.

Consumer inflation, measured year over year, has tumbled from a peak of 9.1% in June 2022 to 3.2%. Yet it's remained stuck above 3%. And in the first two months of 2024, the costs of services such as rents, hotels and hospital stayed high, suggesting that high borrowing rates aren't sufficiently slowing inflation in the economy's vast service sector.

"When we do get that confidence, and we're not far from it," he said,"it'll be appropriate to begin" rate reductions"so that we don't drive the economy into recession."

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