Federal Reserve officials expressed concerns about inflation and the potential impact of President-elect Donald Trump's policies on the U.S. economy, leading to a slower pace of interest rate cuts. The minutes from the December meeting highlighted worries about rising inflation and the effects of potential changes in trade and immigration policy. While the FOMC voted to lower the benchmark borrowing rate, they reduced their outlook for future cuts in 2025.
Federal Reserve officials at their December meeting expressed concern about inflation and the impact that President-elect Donald Trump's policies could have, indicating that they would be moving more slowly on interest rate cuts because of the uncertainty, minutes released Wednesday showed.
However, the extent of what Trump's actions will be and specifically how they will be directed creates a band of ambiguity about what is ahead, which Federal Open Market Committee members said would require caution. However, they also reduced their outlook for expected cuts in 2025 to two from four in the previous estimate at September's meeting, assuming quarter-point increments. The Fed cut a full point off the funds rate since September, and current market pricing is indicating just one or two more moves lower this year.
"A substantial majority of participants observed that, at the current juncture, with its policy stance still meaningfully restrictive, the Committee was well positioned to take time to assess the evolving outlook for economic activity and inflation, including the economy's responses to the Committee's earlier policy actions," the minute said.
Federal Reserve Interest Rate Cuts Inflation Trump Policies Economy
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