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Powell says Fed
will likely cut
rates cautiously
WASHINGTON | 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.”
Medical King recalls 222,000 adult bed
assistance rails
NEW YORK | About 222,000 adult bed assistance rails are under recall due to entrapment and asphyxia hazards, following one death in a residential care facility.
According to a Thursday recall notice published by the U.S. Consumer Product Safety Commission, Medical King is recalling three models of its portable bed rails — because users can become trapped either within the rail or between the product and a mattress.
To date, the medical equipment supplier is aware of one related death. A 66-year-old man died in November 2023 after becoming entrapped between his mattress and a bed rail at a South Carolina residential care facility, Thursday’s recall notice notes.
Consumers in possession of the now-recalled bed rails are urged to immediately stop using them — and contact Medical King for a free repair kit or replacement, which will depend on the model.
The models sold include Medical King’s “Bed Assist Rail with Adjustable Heights” (model numbers 7007 and 7057) and “Bed Assist Rail Without Legs” (model number 7037). There’s no brand-specific labeling on the bed rails, per Thursday’s recall notice, but all of them were sold online between January 2020 and March 2024 — including on major platforms like Amazon, Walmart and eBay.
Medical King notes that the easiest way to tell if your bed rail is impacted by the recall is to check receipts or purchase history. More information can also be found on the company’s online recall page.
“Medical King cares greatly about the safety of its customers and their loved ones and was saddened by the report of a death associated with its product,” a spokesperson for the company said in a statement sent to The Associated Press — noting that it “moved quickly” to conduct a recall with the CPSC after learning of this death.
The spokesperson added that Medical King has redesigned its new bedrails to be compliant with the latest federal safety requirements, which it said came into effect after the unit involved in the reported death had already been sold.
In a separate consumer alert, the CPSC noted that Thursday’s recall marks the ninth recall of adult portable beds that the Commission has issued since 2021 — from a handful of different companies or suppliers.
The CPSC says those nine recalls, along with two other product warnings, have been associated with serious injuries and a total of 18 reported deaths. Among other bed rail recalls issued over the last year, Medline, for example, recalled 1.5 million adult bed rails in May after two entrapment deaths.
The CPSC points its new mandatory safety standards for adult portable bed rails — as well as safety tips for installation. That includes ensuring a bed rail is compatible with your mattress, eliminating gaps and not installing multiple bed rails next to each other.
The average rate
on a 30-year mortgage in the
U.S. slips to 6.78%
The average rate on a 30-year mortgage in the U.S. edged lower this week, ending a six-week climb.
The rate slipped to 6.78% from 6.79% last week, mortgage buyer Freddie Mac said Thursday. That’s still down from a year ago, when the rate averaged 7.4%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also eased this week. The average rate slipped to 5.99% from 6% last week. A year ago, it averaged 6.76%, Freddie Mac said.
Mortgage rates are influenced by several factors, including the yield on U.S. 10-year Treasury bonds, which lenders use as a guide to price home loans. Bond yields have been rising in recent weeks following encouraging reports on inflation and the economy.
Last week, bond yields surged on expectations that President-elect Donald Trump’s plans to lower tax rates, increase tariffs and reduce regulation could ultimately lead to higher U.S. government debt and inflation, along with faster economic growth.
The yield on the 10-year Treasury was at 4.41% at midday Thursday. It was at 3.62% as recently as mid-September.
Despite its recent upward move, the average rate on a 30-year mortgage is still down from 7.22% in May, its peak so far this year. In late September, the average rate got as low as 6.08% — its lowest level in two years.
Economists predict that mortgage rates will remain volatile this year, but generally forecast them to hover around 6% in 2025.
Elevated mortgage rates and high prices have helped keep the U.S. housing market in a sales slump going back to 2022.
The number of Americans filing for jobless claims falls
The number of Americans applying for unemployment benefits fell to the lowest level in six months last week as layoffs remain at relatively healthy levels.
The Labor Department reported Thursday that jobless claim applications fell by 4,000 to 217,000 for the week of Nov. 9. That’s less than the 225,000 analysts forecast.
The four-week average of weekly claims, which evens out some of the weekly ups and downs, fell by 6,250 to 221,000.
Weekly applications for jobless benefits are considered representative of U.S. layoffs in a given week.
In response to weakening employment data and receding consumer prices, the Federal Reserve slashed its benchmark interest rate in September by a half a percentage point and by another quarter-point last week.
The central bank is shifting its focus from taming inflation toward supporting the job market in an attempt to pull off a rare “soft landing,” whereby it brings down inflation without igniting a recession.
The half-point rate cut in September was the Fed’s first rate cut in four years after a series of increases starting in 2022 that pushed the federal funds rate to a two-decade high of 5.3%.
Despite a slight uptick in October, inflation has retreated steadily the past two years, approaching the Fed’s 2% target and leading Chair Jerome Powell to declare recently that it was largely under control.
Two weeks ago, the government reported that an inflation gauge closely watched by the Fed fell to its lowest level in three-and-a-half years.
During the first four months of 2024, applications for jobless benefits averaged just 213,000 a week before rising in May. They hit 250,000 in late July, supporting the notion that high interest rates were finally cooling a red-hot U.S. job market.
In October, the U.S. economy produced a meager 12,000 jobs, though economists pointed to recent strikes and hurricanes that left many workers temporarily off payrolls.
The Labor Department reported In August that the U.S. economy added 818,000 fewer jobs from April 2023 through March this year than were originally reported. The revised total was also considered evidence that the job market has been slowing steadily, compelling the Fed to start cutting interest rates.
Continuing claims, the total number of Americans collecting jobless benefits, fell to 1.87 million for the week of Nov. 2, in line with analysts’ expectations.
—From AP reports
