Federal Reserve Chair Jerome Powell just made a bombshell announcement about this election year.
Despite recent reports showing that unemployment remains low and inflation picked up a bit in January and February, Powell says they’re likely to cut interest rates.
In a speech at Stanford University on Wednesday, Powell said that the recent data doesn’t change the big picture.
He described the economy as having “solid growth, a strong but rebalancing labor market, and inflation moving down toward 2 percent on a sometimes bumpy path.”
Most Fed officials think it’s “likely to be appropriate” to start cutting rates “at some point this year,” he added.
Now, you might be wondering whether the upcoming presidential election will influence the Fed’s decisions. After all, they’ll be meeting to decide on rate cuts right in the middle of campaign season. Powell says that politics won’t be a factor. The Fed was designed to be independent, with officials serving long terms that don’t line up with elections.
Some economists have pushed back their predictions for when the Fed will start cutting rates, thanks to the recent uptick in inflation. Many now think the first rate cut won’t happen until July or even later. This has led to some speculation on Wall Street that the Fed might hold off on rate cuts until after the election in November.
Powell was first nominated to be Fed chair by Trump, who has said that, if he is elected president, he will replace Powell when the Fed chair’s term ends in 2026.
The Associated Press contributed to this article.