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Fed Chair Powell: Rate Cuts ‘on Track’ Amid Slowing Inflation

Chair Jerome Powell said in an interview broadcast Sunday night that the Federal Reserve remains on track to cut interest rates three times this year, a move that’s expected to begin as early as May.

Powell, in an interview recorded Thursday for the CBS news program “60 Minutes,” also said the nation’s job market and economy are strong, with no sign of a recession on the horizon.

“I do think the economy is in a good place,” he said, “and there’s every reason to think it can get better.”

Powell’s comments largely echoed remarks he gave at a news conference Wednesday, after the Fed decided to keep its key interest rate steady at about 5.4%, a 22-year high. To fight inflation, the Fed raised its benchmark rate 11 times beginning in March 2022, causing loans for consumers and businesses to become much more expensive.

The Fed chair also reiterated that the central bank’s next meeting in March was likely too soon for a rate cut. Most economists think the first cut is likely to come in May or June.

With inflation steadily cooling, nearly all the 19 members of the Fed’s policy-setting committee have agreed that cuts in the central bank’s key rate will be appropriate this year, Powell said in the “60 Minutes” interview. A reduction in that rate would help lower the cost of mortgages, auto loans, credit cards and other consumer and business borrowing.

In December, Fed officials indicated that they envisioned three rate cuts in 2024, reducing their benchmark rate to about 4.6% by year’s end. Powell told 60 Minutes that that forecast likely still reflected policymakers’ views.

As gauged by the Fed’s preferred measure, inflation fell to just 2.6% in December compared with 12 months earlier. And in the second half of 2023, inflation was measured at an annual pace of just 2%, matching the Fed’s target level, down drastically from a peak of 7.1% in the summer of 2022.

Read the full report from the Associated Press here.

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