Federal Reserve Board Chair Jerome Powell speaks during his appearance before the House Financial Services Committee on Capitol Hill, March 6, 2024, in Washington. The Federal Reserve is set this week to leave interest rates unchanged for a fifth straight …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.
Since then, though, the latest inflation measures have turned out to be hotter than expected: A government report showed that consumer prices jumped from January to February by much more than is consistent with the‘s target. A second report showed that wholesale inflation also came in surprisingly high - a possible sign of inflation pressures in the pipeline that could cause consumer price increases to stay elevated in the coming months.ends its latest two-day meeting.
Their previous such projections in December showed that the officials expected to cut their benchmark rate three times this year, up from a previous forecast of two cuts. Most economists think the latest quarterly projections will again show that the policymakers expect to cut rates three times in 2024, though there’s a possibly they could reduce the expected number to two. Economists generally envision the first rate cut coming in June.
Despite widespread evidence of a sturdy economy, there are signs that it could weaken in the coming months. Americans slowed their spending at retailers in January and February, for example. The unemployment rate has reached 3.9% - still a healthy level, but up from a half-century low last year of 3.4%. And much of the hiring in recent months has occurred in government, health care and private education, with many other industries barely adding any jobs.
Japan’s central bank, by contrast, is moving in the opposite direction: On Tuesday, it raised its benchmark rate for the first time in 17 years, in response to rising wages and inflation finally nearing its 2% target. The Bank of Japan was the last major central bank to lift its key rate out of negative territory, ending an unusual period that had led to negative rates in many European countries as well as in Japan.
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