Federal Reserve could signal future rate cuts

The Federal Reserve It will probably move closer on Wednesday to reducing its benchmark interest rate after two years of increases designed to combat inflation. However, it will most likely not say when or how quickly it will make such reductions.

While the US central bank is expected to reduce rates In the coming months, Wednesday will predictably indicate that it will wait to see that inflation, which has decreased greatly compared to the peak it reached in recent years, is approaching the 2% goal.

The bank’s reference rate influences loans for individuals and companies, and companies, investors and ordinary people are waiting for the bank to reduce the cost of credit.

The Fed is assessing the economy as the election campaign is affected by voters’ perception of the president’s economic management. Joe Biden. Republicans in Congress are trying to blame Biden for the inflation that has plagued the nation since 2021. But the most recent polls indicate greater confidence in the economy.

Most analysts predict that the first rate reduction will occur in May or June. At the end of last year, investors in Wall Street They predicted there would surely be a taper in March, but recent more cautious comments from Fed officials have dashed expectations of that.

Collectively, bank officials probably don’t feel much urgency in starting to cut rates, a point that Fed Chairman Jerome Powelll, he could emphasize in his press conference on Wednesday.

The economy remains robust and does not appear to need the stimulus of a rate cut, something that typically facilitates more borrowing and spending and could even revive inflation.