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Strong Economy Leaves Fed in No Hurry to Cut Interest Rates, Says Chair Powell

Don't expect relief from high interest rates in the short term, but here's what you can do.

Headshot of Tiffany Connors
Headshot of Tiffany Connors
Tiffany Connors Former Staff Editor
Tiffany Wendeln Connors was a senior editor for CNET Money with a focus on credit cards. Previously, she covered personal finance topics as a writer and editor at The Penny Hoarder. She is passionate about helping people make the best money decisions for themselves and their families. She graduated from Bowling Green State University with a bachelor's degree in journalism and has been a writer and editor for publications including the New York Post, Women's Running magazine and Soap Opera Digest. When she isn't working, you can find her enjoying life in St. Petersburg, Florida, with her husband, daughter and a very needy dog.
Tiffany Connors
2 min read
Fed Chair Jerome Powell at a news conference
Kent Nishimura/Getty Images

If you've been eagerly anticipating an onslaught of interest rate cuts, Federal Reserve Chair Jerome Powell's latest comments could put a crimp in your plans.

Following the Fed's quarter-percent rate cut at its November meeting, experts have been less confident about more cuts in the near term amid continued reports about resilient consumer spending and mixed employment reports. Powell's remarks to business leaders in Dallas this week indicated that the Fed isn't in any rush to mess with a good thing.

"The economy is not sending any signals that we need to be in a hurry to lower rates," he said, calling the US economy's recent performance "by far the best of any major economy in the world." 

His comments came a day after the Bureau of Labor Statistics' monthly Consumer Price Index report showed that inflation rose by 2.6% annually in October. Although the report aligned with most experts' expectations, it marked a reversal of the inflation measure's slow but steady decline since this spring. Housing remains the biggest contributor to rising prices, accounting for half of the increase, as the shelter index rose by 0.4% month over month, according to the BLS report. 

The latest inflation news could further dampen hopes that the Federal Reserve will cut interest rates in December. After months of cooling inflation and signs of a softening labor market, the Fed lowered interest rates by a half percent in September and another quarter percent this month. The committee had penciled in another quarter percent rate cut in December, as well as additional cuts in 2025.

But if inflation continues to inch upward, the central bank may decide it needs to leave rates high to avoid a repeat of runaway inflation. Inflation peaked at 9.1% in June 2022 before slowly making its way back down closer to the Fed's target range of 2%.

The Fed doesn't directly set interest rates on consumer products, including mortgages, credit cards and savings accounts. Rather, its adjustments to the federal funds rate as well as its economic outlook influence the interest rates offered to you by banks and lenders. 

While higher interest rates can make it more expensive to borrow money, they can also help you earn more on your savings. That can help those who're able to put aside even a small amount of money, said Bernadette Joy, personal finance coach and member of the CNET Expert Review Board.

"High-yield savings accounts and CDs are still offering decent returns, so putting away even a little extra could be a smart way to round out the year," she said.

About the Author

Headshot of Tiffany Connors
Former Staff Editor
Former Staff Editor

Tiffany Wendeln Connors was a senior editor for CNET Money with a focus on credit cards. Previously, she covered personal finance topics as a writer and editor at The Penny Hoarder. She is passionate about helping people make the best money decisions for themselves and their families. She graduated from Bowling Green State University with a bachelor's degree in journalism and has been a writer and editor for publications including the New York Post, Women's Running magazine and Soap Opera Digest. When she isn't working, you can find her enjoying life in St. Petersburg, Florida, with her husband, daughter and a very needy dog.