| Federal Reserve officials will likely reduce their benchmark interest rate later this year, chairman Jerome Powell said, despite recent reports showing that the US economy is still strong and that US inflation picked up in January and February.
Most Fed officials “see it as likely to be appropriate” to start cutting their benchmark rate “at some point this year”, he added. The recent pickup in inflation, though slight, has led some economists to postpone their projections for when the Fed will begin cutting rates. Rate cuts would begin to reverse the 11 rate increases the Fed carried out beginning in March 2022, to fight the worst inflation bout in four decades. They would likely lead, over time, to lower borrowing rates for households and businesses.
Former President Donald Trump has called Powell “political” for considering rate cuts that Trump has said could benefit Biden and other Democrats. Powell was first nominated to be Fed chair by Trump, who has said that, if he is elected president, he will replace Powell when the Fed chair’s term ends in 2026.
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