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Powell: Federal Reserve is still on track to cut rates despite signs of persistent inflation

Federal Reserve Board Chair Jerome Powell speaks at the Business, Government and Society Forum at Stanford University in Stanford, Calif., Wednesday, April 3, 2024. (AP Photo/Jeff Chiu)

WASHINGTON (AP) — Federal Reserve officials will likely reduce their benchmark interest rate later this year, Chair Jerome Powell said Wednesday, despite recent reports showing that the U.S. economy is still strong and that U.S. inflation picked up in January and February.

“The recent data do not ... materially change the overall picture,” Powell said in a speech at Stanford University, “which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2 percent on a sometimes bumpy path.”

Most Fed officials “see it as likely to be appropriate” to start cutting their benchmark rate “at some point this year," he added.

In his speech, Powell also sought to dispel any notion that the Fed’s interest-rate decisions might be affected by this year’s presidential election. The Fed will meet and decide whether to cut rates during the peak of the presidential campaign, in July and September.

Though inflation has cooled significantly from its peak, it remains above the Fed's 2% target. And average prices are still well above their pre-pandemic levels — a source of discontent for many Americans and potentially a threat to President Joe Biden's re-election bid.

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.

Federal Reserve Board Chair Jerome Powell speaks at the Business, Government and Society Forum at Stanford University in Stanford, Calif., Wednesday, April 3, 2024. (AP Photo/Jeff Chiu)
Federal Reserve Board Chair Jerome Powell speaks at the Business, Government and Society Forum at Stanford University in Stanford, Calif., Wednesday, April 3, 2024. (AP Photo/Jeff Chiu)
Federal Reserve Board Chair Jerome Powell waits to speak at the Business, Government and Society Forum at Stanford University in Stanford, Calif., Wednesday, April 3, 2024. (AP Photo/Jeff Chiu)