WASHINGTON — After Federal Reserve officials meet this week, a statement they will issue may suggest that they’ve seen meaningfulYet it's hard to say, because the officials themselves may not know for sure until they begin their meeting. That's because the government's latest snapshot of U.S. inflation will be released Wednesday morning, just before the Fed begins the second day of its policy discussions.
A Fed rate cut might give the economy a modest lift, which would be welcomed by President Joe Biden's re-election campaign, which is struggling to counter many voters' unhappiness with the inflation spike of the past several years. Though consumer inflation has slowed dramatically since peaking at 9.1% in mid-2022, it was still 3.4% in April, well above the Fed's target.
At his news conference, Powell will likely reiterate that Fed officials need more confidence that inflation is returning to 2% before they would consider rate cuts, and that this will likely take additional time. The number of open jobs fell in April to the lowest level in three years, though the number remains high by historic standards. And consumers actually cut back on their spending in April, after adjusting for inflation, a sign that high prices and elevated interest rates are pressuring Americans' finances.
Given last year's strong growth and substantial job gains earlier this year, some officials had come to doubt that their rates were high enough. Minutes of the Fed's most recent meeting suggested that some officials had even expressed openness to additional rate hikes.
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