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Presented by BP — The Fed may not cut until November. {beacon}
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Business & Economy
Business & Economy
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The Big Story
High interest rates aren't going anywhere
The central bank doesn't expect to cut rates anytime soon as progress on inflation plateaus, Federal Reserve Chair Jerome Powell told reporters Wednesday.
© Allison Robbert
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.
While the Fed signaled at the end of last year it would start cutting rates in 2024, the FOMC cited a “lack of further progress” toward its inflation goal of 2 percent as part of its Wednesday decision.
“It is likely that gaining such greater confidence will take longer than previously expected,” Powell told reporters.
Most traders don’t expect the Fed to start cutting rates until November, according to the CME FedWatch Tool.
Inflation ticked up to 3.5 percent year-over-year in March, according to the latest consumer price index (CPI) reading.
While the U.S. labor market is humming along, with 303,000 jobs added in March and a streak of sub-4 percent unemployment not seen since the 1960s, economic growth fell short of expectations during the first quarter of the year.
"The signal that we're taking is that it's likely to take longer for us to gain confidence that we are on a sustainable path to 2 percent inflation," Powell said.
“Clearly restrictive monetary policy needs more time to do its job," Powell later added.
As the 2024 election draws closer, pressure on Powell and the Fed has ramped up.
Former President Trump, who nominated Powell during his first term, recently suggested the lifelong Republican may cut rates to help Democrats in the 2024 election. His allies are 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, although his campaign said that was not an official position.
“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, again, I don’t know how you stop it,” Powell said.
The Hill’s Taylor Giorno has more here.
Welcome to The Hill’s Business & Economy newsletter, we’re Aris Folley and Taylor Giorno — covering the intersection of Wall Street and Pennsylvania Avenue.
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Essential Reads
Key business and economic news with implications this week and beyond:
More Americans see China as an ‘enemy’
Americans are increasingly viewing China as an “enemy” of the U.S., according to a new survey.
Full Story Dave & Buster’s to allow customers to bet on arcade games
Story at a glance Dave and Buster’s will soon have a betting feature for its games for users 18 and older. The arcade company recently partnered with Lucra Sports, a gamification software company. Details are scarce on how the feature will work. Dave and Buster’s customers can soon make a friendly $5 wager on arcade games like skeeball and basketball.
Full Story J&J proposing to pay $6.5B to resolve almost all talc ovarian cancer suits
A subsidiary of Johnson & Johnson (J&J) is proposing to pay nearly $6.5 billion to resolve nearly all the talc ovarian cancer lawsuits brought against the company.
Full Story A MESSAGE FROM BP
Wind or oil & gas? One top energy investor is doing both
bp supports more than 300,000 jobs across America. Jobs like updating turbine blades at one of our Indiana wind farms and jobs producing more secure energy in the Gulf of Mexico.
The Ticker
Upcoming news themes and events we're watching:
- The Labor Department on Friday will release its jobs report for April at 8:30 a.m. E.T.
Good to Know
Business and economic news we've flagged from other outlets:
- S&P 500 remains lower as traders digest latest Fed decision (CNBC)
- Americans have tipping fatigue. Domino’s thinks it has the answer (CNN)
- The Ozempic Effect: How a Weight Loss Wonder Drug Gobbled Up an Entire Economy (Bloomberg)
A MESSAGE FROM BP
More lower carbon energy + keeping oil & gas flowing
From building grid-scale solar in Ohio to producing more energy with fewer operational emissions in the Permian Basin, see how bp is investing in America.
What Others are Reading
Top stories on The Hill right now:
Arizona Legislature repeals 1864 abortion ban after two GOP senators rebel
Arizona lawmakers on Wednesday voted to repeal a Civil War-era law that banned nearly all abortions, after a pair of Republican senators joined with all Democrats. Read more
Witnesses line up to slam Michael Cohen ahead of Trump trial star’s turn
NEW YORK — In 2011, Stormy Daniels’s manager phoned a lawyer to complain that “some jerk” had called her up threatening to sue over a blog post claiming the porn actor slept with Donald Trump. Read more
What People Think
Opinions related to business and economic issues submitted to The Hill:
- Biden’s worst-case economic scenario is unfolding at the worst possible time
- American leadership is needed, Biden should seek to revive the WTO
You're all caught up. See you tomorrow!
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