Federal Reserve likely to cut rates, may signal just one more reduction next year
By CHRISTOPHER RUGABER Associated Press Economics Writer WASHINGTON AP The Federal Reserve will almost certainly reduce its key interest rate Wednesday but the bigger question for financial markets and the business activity is what signals Chair Jerome Powell may send regarding the central bank s next approaches Related Articles Gaskin Owning AI future means owning the resource future Logo blowup hits Cracker Barrel revenue Rate cut decision looms at Fed OpenAI names Slack CEO Dresser as first chief of revenue as ChatGPT maker aims to make a profit Cracker Barrel lowers revenue forecast as traffic falls after logo blowup It would be the third cut in a row and bring the Fed s key rate to about the lowest in nearly three years For Americans struggling with high borrowing costs for homes cars and other large purchases this year s rate cuts could reduce those costs over time though it s not guaranteed Mortgage rates in particular are also influenced by financial markets This week s meeting could presage a much cloudier path for the Fed in The establishment shutdown has delayed two months of jobs and inflation input leaving the Fed with much less information on hiring and inflation than it is used to Powell s term as chair ends in May and President Donald Trump will nominate a replacement possibly as soon as this month who will almost certainly push for lower borrowing costs Yet the new chair could face resistance from other Fed administrators In addition to a likely rate cut the Fed could signal that the bar for another reduction when they next meet in late January will be higher than it has been this fall A year ago after implementing a third rate cut at its December meeting the Fed indicated it would likely keep rates unchanged in the coming months It didn t cut again until September They would love to take a pass in January push it off to March and just wait for a couple of more inflation reports to come in Tom Porcelli chief economist at Wells Fargo disclosed The Fed s -member rate-setting committee is deeply divided between those who assistance reducing rates to bolster hiring and those who d prefer to keep rates unchanged because inflation remains above the central bank s target Higher borrowing costs can slow spending and the market system and reduce price increases The executive commented last week in a delayed statement that the Fed s preferred inflation gauge remained elevated in September with both overall and core prices rising from a year earlier The lack of economic information has contributed to the divisions But by their January meeting they ll have up to three months of backlogged reports to consider If those figures show that hiring has remained weak or that layoffs have spiked the Fed could reduce rates again in January By contrast if they show hiring has stabilized while inflation remains elevated they may hold off on additional cuts for several months On Wednesday the Fed will also issue their quarterly set of economic projections which include forecasts for where they will set rates at the end of this year and next Economists expect just one rate reduction next year as they did in September Yet the projections will likely carry much less weight this year since a new chair will allegedly push for more reductions And if the market weakens more bureaucrats will promotion reductions In an interview with Politico published Tuesday Trump explained yes when inquired if reducing rates promptly was a litmus test for his new Fed chair Trump has hinted that he will likely pick Kevin Hassett his top economic adviser Hassett has often called for lower borrowing costs but this week has been more circumspect In an interview Tuesday on CNBC when requested how a great number of more rate cuts he would advocacy Hassett did not give a specific answer and commented What you need to do is watch the figures
