Fed’s Powell says US close but not there yet on inflation
Federal Reserve Chair Jerome Powell says the US has made progress toward 2% inflation but isn’t quite there yet during a House Financial Services Committee hearing.
Bloomberg
Despite a partial rebound the past two trading days, the U.S. stock market is down sharply from its record high in mid-February and could use a shot in the arm.
Don’t expect the Federal Reserve to provide it.
With the Fed expected to hold its key interest rate steady at the end of a two-day meeting Wednesday, the drama will center on the number of rate cuts Fed officials forecast for 2025.
Since President Donald Trump’s aggressive tariffs on various imports are projected to push up inflation and dampen economic growth, the central bank is caught uncomfortably between its two mandates.
The Fed raises rates, or keeps them higher for longer, to tame inflation. It cuts rates to bolster a weak economy and job market.
So which of those missions do policymakers serve this week? Should inflation concerns prompt them to scale back their rate cut forecast? Or should signs of a wobbly economy prod them to predict more rate decreases, boosting the stock market and, indirectly, growth prospects?
What is the Fed rate prediction?
With forces pulling in both directions, several top forecasters expect Fed officials to play it down the middle and maintain their December forecast of two quarter-point rate decreases in 2025. But with inflation still elevated and…
