Federal Reserve may keep rates unchanged for months as economy shows signs of health

WASHINGTON -- Federal Reserve officials are expected to keep their short-term interest rate unchanged Wednesday after three cuts last year, ignoring huge pressure for lower borrowing costs from the White House in favor of waiting to see how the economy evolves.The central bank's rate reductions last year were intended to shore up the economy and prevent a sharper deterioration in the job market, after hiring slowed to a near-crawl in the wake of President Donald Trump's sweeping tariffs last April.

Yet there are signs that unemployment has stabilized and the economy could be picking up.At the same time, inflation remains stubbornly above the Fed's 2% target.

All those trends argue for keeping rates where they are.A key issue that Chair Jerome Powell will likely address at his news conference Wednesday is how long the Fed will remain on hold.

The rate-setting committee remains split between those officials opposed to further cuts until inflation comes down, and those who want to lower rates to further support hiring.In December, just 12 of the 19 participants in the committee's meetings supported at least one more rate cut this year.Most economists forecast the Fed will cut twice this year, most likely at the June meeting or later.Fed officials meet this week in the shadow of unprecedented pressure from the Trump White House.

Powell said Jan.11 that the Fed had received subpoenas from the Justice Department as part of a criminal investigation into his congressional testimony about a $2.5 billion building renovation.

Powell in an unusually blunt video statement said the subpoenas were a pretext to punish the Fed for not cutting rates more quickly.And last week, the Supreme Court took up Trump's attempt from last year to fire Fed governor Lisa Cook over allegations of mortgage fraud, which she denies.

No president has fired a governor in the Fed’s 112-year history.The justices at an oral argument appeared to be leaning toward allowing her to stay in her job un...