Powell: Rate cuts will take 'longer than previously expected'

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Allison Robbert

Federal Reserve Chairman Jerome Powell appears at a House Financial Services Committee hearing for the Semiannual Monetary Policy Report to the Congress at the Capitol on Wednesday, March 6, 2024.

Federal Reserve Chair Jerome Powell confirmed Wednesday that the central bank is pushing back its plans for rate cuts as inflation plateaus well above the bank’s target.

The Federal Open Markets Committee (FOMC), the central bank committee tasked with setting monetary policy, voted Wednesday to keep the federal funds rate at a range of 5.25 percent to 5.5 percent, where it has been since July. The FOMC cited a “lack of further progress” toward hitting its inflation goal of 2 percent.

“It is likely that gaining such greater confidence will take longer than previously expected,” Powell told reporters.

While the Fed signaled at the end of last year it would start cutting rates in 2024, traders now expect the first rate cuts won’t come until at least November, according to the CME FedWatch Tool.

Powell said it was unlikely that the next policy move would be a rate hike, but noted the central bank is “committed to retain retaining our current restrictive stance of policy for as long as it’s appropriate, and we’ll do that.”

Pressure on Powell and the central bank has ramped up as the 2024 election draws closer. Progressive Democrats have pushed Powell to cut rates, and former President Trump has suggested the lifelong Republican chair he appointed during his presidency would cut rates to help Democrats in the 2024 election.

Trump allies may also be crafting a plan to erode the independence of the central bank if he wins the election in November, The Wall Street Journal reported last week. While the Trump campaign said the plan should not be considered an official position, his inability to control the Fed and what it does on interest rates was a source of angst for the former president.

“Read all the transcripts and see if anybody mentions in any way the pending election. It just isn’t part of our thinking. It’s not what we’re hired to do. If we start down that road, I can’t… I don’t know how to stop,” Powell said.

Updated at 3:26 p.m. EDT.