WASHINGTON — The Federal Reserve will likely move closer Wednesday to cutting its key interest rate after nearly two years of hikes that were intended to fight the worst inflation in decades. Yet it may not provide much of a hint about when — or how fast — it will do so, according to an Associated Press report.
Though Fed officials are expected to cut rates within the next few months, they’ll likely signal Wednesday that they expect to wait until they’re confident that inflation, which has tumbled from its peak, is reliably moving to their 2% target. The central bank’s benchmark rate influences the cost of most consumer and business loans, and companies, investors and individuals have been eager for the central bank to ease the cost of borrowing.
The Fed is assessing the economy at a time when the intensifying presidential race is pivoting in no small part on voters’ perceptions of President Joe Biden’s economic stewardship. Republicans in Congress have tried to tie Biden to the high inflation that gripped the nation beginning in 2021. But the most recent surveys indicate rising confidence in the economy.
Most Fed watchers think the central bank’s first rate reduction will occur in May or June. Late last year, Wall Street investors had bet that a rate cut in March was a near-certainty. But cautionary comments by a number of Fed officials have dispelled most expectations for a cut that soon.