Fed set to hold rates amid political storm around Powell

The Federal Reserve is widely expected to halt its interest-rate-cutting cycle this week, as a steadier jobs market restores a degree of consensus at the central bank after months of growing division.

- MARIA ELOISA CAPURRO

Several officials, including some close to the chair, have been signaling that rates are now in the right place — at 3.5 per cent-3.75 percent following three consecutive cuts — to shore up employment and still keep downward pressure on inflation.

“They are now essentially within the strike zone of neutral estimates,” said Josh Hirt, senior US economist at The Vanguard Group, referring to the level where rates will neither restrain nor stimulate the economy. “That brings about more caution, less urgency” for more cuts, he said.

The meeting offers Chair Jerome Powell a chance to direct attention away from the political and legal dramas engulfing the Fed, and back to the central bank’s core job of controlling inflation and maimising employment. Any respite may prove short-lived.