Powell says Fed will likely cut rates cautiously given persistent inflation pressures

WASHINGTON (AP) — Chair Jerome Powell said Thursday that the Federal Reserve will likely cut its key interest rate slowly and deliberately in the coming months, in part because inflation has shown signs of persistence and the Fed's officials want to see where it heads next.

Powell, speaking in Dallas, said that inflation is edging closer to the central bank's 2% target, “but it is not there yet."

At the same time, he said, the economy is strong, and the policymakers can take time to monitor the path of inflation.

“The economy is not sending any signals that we need to be in a hurry to lower rates,” the Fed chair said. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

Economists expect the Fed to announce another quarter-point rate cut in December, after a quarter-point reduction last week and half-point cut in September.

But the Fed's steps after that are much less clear. In September, the central bank's officials collectively signaled that they envisioned cutting their key rate four times in 2025. Wall Street traders, though, now expect just two rate reductions, according to futures pricing tracked by CME FedWatch. And after Powell's cautious remarks Thursday, traders estimated the likelihood of a Fed rate cut in December at just below 59%, down from 83% a day earlier.

The Fed's benchmark interest rate tends to influence borrowing rates across the economy, including for mortgages, auto loans and credit cards. Other factors, though, can also push up longer-term rates, notably expectations for inflation and economic growth.

For example, Donald Trump's presidential election victory has sent yields on Treasury securities higher. It is a sign that investors expect faster growth next year as well as potentially larger budget deficits and even higher inflation should Trump impose widespread tariffs and mass deportations of migrants as he has promised.

In his remarks Thursday, Powell suggested that inflation may remain stuck somewhat above the Fed's target in the coming months. But he reiterated that inflation should eventually decline further, “albeit on a sometimes bumpy path.”

Under questioning, Powell also explained why he considers the Fed's role as an independent federal agency to be crucial to its ability to fight inflation. During his first term, Trump threatened to try to fire Powell for not cutting interest rates. And during this year’s election campaign, Trump asserted that as president, he should have a “say” on the Fed's rate policies.

Powell said Thursday that the Fed's independence from political concerns has made the public confident that the policymakers will keep inflation low over time. That confidence, in turn, has helped reduce inflation after it had spiked in the wake of the pandemic. When consumers and businesses expect inflation to slow, they act in ways that help hold it down — by, for example, not demanding high cost-of-living raises.

“The public," Powell said, "believed that we would get inflation down, that we would restore price stability. And that’s ultimately the key to it.”

Powell declined to comment on other political topics, including the potential impacts of Trump's proposals to impose sweeping tariffs and implement mass deport

Other Fed officials have also recently expressed uncertainty about how much more they can cut rates, given the economy’s steady growth and the apparent stickiness of inflation.

As measured by the central bank’s preferred inflation gauge, so-called core prices, which exclude volatile food and energy costs, have been stuck in the high 2% range for five months.

On Wednesday, Lorie Logan, president of the Fed’s Dallas branch, said it was not clear how much more the Fed should cut its key short-term rate.

“If we cut too far ... inflation could reaccelerate and the (Fed) could need to reverse direction,” Logan said. “I believe it’s best to proceed with caution.”

Federal Reserve Chair Jerome Powell, left, speaks to the Dallas Regional Chamber as moderator Catherine Rampell looks during an event in Music Hall at Fair Park Thursday, Nov. 14, 2024, in Dallas. (AP Photo/LM Otero)

Federal Reserve Chair Jerome Powell, left, speaks to the Dallas Regional Chamber as moderator Catherine Rampell looks during an event in Music Hall at Fair Park Thursday, Nov. 14, 2024, in Dallas. (AP Photo/LM Otero)

Federal Reserve Chair Jerome Powell, left, speaks to the Dallas Regional Chamber as moderator Catherine Rampell looks during an event in Music Hall at Fair Park Thursday, Nov. 14, 2024, in Dallas. (AP Photo/LM Otero)

Federal Reserve Chair Jerome Powell speaks to the Dallas Regional Chamber during an event in Music Hall at Fair Park Thursday, Nov. 14, 2024, in Dallas. (AP Photo/LM Otero)

Federal Reserve Chair Jerome Powell listens to a question from the moderator on the stage during a Dallas Regional Chamber event in Music Hall at Fair Park Thursday, Nov. 14, 2024, in Dallas. (AP Photo/LM Otero)

Federal Reserve Chair Jerome Powell listens to a question during a Dallas Regional Chamber event in Music Hall at Fair Park Thursday, Nov. 14, 2024, in Dallas. (AP Photo/LM Otero)

Federal Reserve Chair Jerome Powell speaks to the Dallas Regional Chamber during an event in Music Hall at Fair Park Thursday, Nov. 14, 2024, in Dallas. (AP Photo/LM Otero)

President-elect Donald Trump says he will nominate anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services.

Trump’s pick of conservative loyalist Matt Gaetz to serve as attorney general has Democrats sounding the alarm with Sen. Dick Durbin saying Gaetz “would be a disaster” in part because of Trump’s threat to use the Justice Department “to seek revenge on his political enemies.”

Republicans have won enough seats to control the U.S. House, completing the party’s sweep into power and securing their hold on U.S. government alongside President-elect Donald Trump.

Follow the AP’s Election 2024 coverage at: https://apnews.com/hub/election-2024.

Here’s the latest:

Trump would have Kennedy lead a massive Cabinet agency that oversees everything from drug, vaccine and food safety to medical research and the social safety net programs Medicare and Medicaid. He said before the election he would give Kennedy free rein over health policy.

Here’s a look at Kennedy and the agency he’ll be tasked with leading:

Read more about Robert F. Kennedy Jr.

Kennedy stuck a deal with Trump to give the now president-elect his endorsement in exchange for a role in health policy in the administration. Here are some of his positions on the subject:

President-elect Donald Trump is expected to nominate anti-vaccine activist Robert F. Kennedy Jr to serve as secretary of the Department of Health and Human Services, according to two people familiar with the discussions who spoke on condition of anonymity.

HHS is a massive Cabinet agency that oversees everything from drug, vaccine and food safety to medical research and the social safety net programs Medicare and Medicaid.

Kennedy, a former Democrat who ran as an independent in this year’s presidential race, abandoned his bid after striking a deal to give Trump his endorsement with a promise to have a role in health policy in the administration.

He and Trump have since become good friends, with Kennedy frequently receiving loud applause at Trump’s rallies.

— Jill Colvin

Though it’s not clear if Dimon was interested in a role. The announcement came as Trump has not yet named a Treasury Secretary for his incoming administration or others to fill economic and banking related roles.

Dimon had no plans to join Trump’s administration, according to news reports in recent weeks.

Trump, in a post on his social media network Truth Social on Thursday, said he respects Dimon “greatly” but “he will not be invited to be a part of the Trump Administration.”

“I thank Jamie for his outstanding service to our Country!” Trump added.

In a July interview with Bloomberg, Trump said Dimon was someone he was considering for Treasury Secretary. A few weeks later, he reversed himself, saying in a post on Truth Social that he didn’t know “who said it, or where it came from, perhaps the Radical Left, but I never discussed, or thought of, Jamie Dimon” for Treasury Secretary.

Republicans went to court in Pennsylvania on Thursday amid vote counting in the U.S. Senate election between Democratic Sen. Bob Casey and Republican David McCormick, as the campaigns prepare for a recount and press counties for favorable ballot-counting decisions.

The lawsuits ask courts not to allow counties to count mail-in ballots where the voter didn’t write a date on the return envelope or wrote an incorrect date. The two GOP suits could be among many before the last vote in the Senate race is counted, especially with the contest headed toward a state-mandated recount.

The Associated Press called the race for McCormick last week, concluding that not enough ballots remained to be counted in areas Casey was winning for him to take the lead.

After losing the White House and both houses of Congress, Democrats are grappling with how to handle transgender politics and policy following a campaign that featured withering and often misleading GOP attacks on the issue.

There's plenty of second-guessing after President-elect Donald Trump anchored his victory over Vice President Kamala Harris with sweeping promises on the economy and immigration. But Democrats also won't soon forget the punchline in anti-transgender Trump ads that became ubiquitous by Election Day: “Kamala is for they/them; President Trump is for you.”

“Week by week when that ad hit and stuck and we didn’t respond, I think that was the beginning of the end,” former Democratic Pennsylvania Gov. Ed Rendell said of the 30-second spot that was part of $215 million in anti-transgender advertising by Trump and Republicans, according to tracking firm AdImpact.

Kentucky U.S. Sen. Rand Paul said Thursday that he'll lead the Senate Homeland Security and Governmental Affairs Committee, where he intends to immediately take up President-elect Donald Trump’s plan to reinstate a policy requiring asylum-seekers to wait in Mexico for hearings in U.S. immigration court.

Paul said he'll be the committee’s new chair after Republicans won control of the Senate in this month’s elections. The new role will put Paul — a limited-government advocate and longtime skeptic of surveillance programs — in charge of a committee with broad jurisdiction over government operations, including the Department of Homeland Security. Paul has been the committee’s ranking Republican during Democratic control of the Senate.

Democrat Janelle Bynum won election to a U.S. House seat representing Oregon on Thursday, defeating Republican Rep. Lori Chavez-DeRemer.

The district, which includes the Portland suburbs and stretches through Bend, was a top target for Democrats. Democrats lost this seat in 2022, when Jamie McLeod-Skinner defeated seven-term Democratic Rep. Kurt Schrader in the primary but lost the general election. The district took in parts of more conservative central Oregon after 2022 redistricting.

Bynum represents Happy Valley and North Clackamas in the state Legislature. The Associated Press declared Bynum the winner at 12:47 p.m. EST.

Republican and Democratic senators alike on the Judiciary Committee that would review Matt Gaetz’s attorney general nomination are calling for a House Ethics Committee investigation into Gaetz to be made available to them.

“I think it’s going to be material in the proceedings,” said Sen. Thomas Tillis, a North Carolina Republican.

Sen. John Cornyn, a Texas Republican, said, “I think there should not be any limitation on the Senate Judiciary Committee’s investigation, including whatever the House Ethics Committee has generated.”

Sen. Dick Durbin, the Democrat who currently chairs the Judiciary Committee, earlier Thursday said in a statement, “We cannot allow this valuable information from a bipartisan investigation to be hidden from the American people.”

Thune did not mention Matt Gaetz, Tulsi Gabbard or other Trump picks that have raised deep concerns among several senators.

But he said senators should expect “an aggressive schedule until his nominees are confirmed.”

Senate Judiciary Committee Chairman Dick Durbin, D-Ill., is calling on the House Ethics Committee to preserve information it's gathered on former Republican Rep. Matt Gaetz, President-elect Donald Trump’s intended nominee for attorney general, and also share it with the Senate.

Trump announced Gaetz as his pick for the post Wednesday and Gaetz immediately resigned from Congress, ending the investigation against him. The ethics panel said several months ago that its review included whether Gaetz engaged in sexual misconduct and illicit drug use, accepted improper gifts and sought to obstruct government investigations of his conduct. Gaetz has categorically denied all the allegations before the committee.

“The sequence and timing of Mr. Gaetz’s resignation from the House raises serious questions about the contents of the House Ethics Committee report,” Durbin said Thursday. “We cannot allow this valuable information from a bipartisan investigation to be hidden from the American people.”

The Democrat looking to unseat an incumbent Republican in a close Iowa congressional race, one of a handful yet to be called after Republicans won control of the U.S. House, has asked for a recount.

Democrat Christina Bohannan’s campaign on Thursday requested the recount in her bid against Republican incumbent Rep. Mariannette Miller-Meeks to represent Iowa’s 1st District. The initial tally puts Bohannan fewer than 1,000 votes — less than a percentage point — behind Miller-Meeks.

The contest is a much tighter rematch of 2022, when Miller-Meeks won by 7 percentage points. Miller-Meeks earned a first term in Congress representing Iowa’s 2nd District when she defeated Democrat Rita Hart by just six votes in 2020.

FILE - The speaker's dais is seen in the House of Representatives of the Capitol in Washington, Feb. 28, 2022. In the 2024 elections, Republicans have won enough seats to control the U.S. House, completing the party's sweep into power and securing their hold on U.S. government alongside President-elect Donald Trump. (AP Photo/J. Scott Applewhite, File)

FILE - Rep. Matt Gaetz, R-Fla., speaks during the Conservative Political Action Conference, CPAC 2024, at the National Harbor, in Oxon Hill, Md., Feb. 23, 2024. (AP Photo/Alex Brandon, File)

President-elect Donald Trump speaks at meeting of the House GOP conference, Wednesday, Nov. 13, 2024, in Washington. (AP Photo/Alex Brandon)

FILE - The chamber of the House of Representatives is seen at the Capitol in Washington, Feb. 28, 2022. In the 2024 elections, Republicans have won enough seats to control the U.S. House, completing the party's sweep into power and securing their hold on U.S. government alongside President-elect Donald Trump. (AP Photo/J. Scott Applewhite, File)