The Federal Open Market Committee (FOMC), responsible for setting monetary policy, has decided to maintain the federal funds rate between 5.25 percent and 5.5 percent, where it has been since July. Despite hints of rate cuts in 2024, the FOMC noted a lack of progress towards its 2 percent inflation target as a reason for this decision.
While the job market is strong, with 303,000 jobs added in March and unemployment below 4 percent, economic growth in the first quarter fell short of expectations. Powell emphasized the need for time to allow restrictive monetary policy to take effect.
As the 2024 election approaches, pressure on Powell and the Fed has increased. Former President Trump implied that Powell may cut rates to benefit Democrats, sparking discussions about potentially limiting the central bank’s independence if Trump were to be reelected. However, Chair Jerome Powell dismissed these concerns, stating that considerations of elections are not part of the Fed’s mandate. He warned against politicizing the central bank, emphasizing the importance of maintaining independence.