Federal Reserve Chair Jerome Powell faces a crucial year as he steers the U.S. economy toward a soft landing while contending with looming policy changes from the incoming Trump administration.
The Federal Reserve will conclude its final meeting of 2024 on Wednesday. Next year will likely be Fed Chair Jerome Powell 's last full one at the helm of the U.S. central bank, with his four-year term due to expire in May of 2026. Powell's more than six years as Fed chief have been consequential, but the coming months could present new challenges as well as an opportunity to close out some unfinished business.
Powell's main mission is completing the 'soft landing' with inflation at 2% and full employment, in what's likely to be trickier weather' with tax, tariff and immigration policies that could make the economic landscape harder to read, said Donald Kohn, a former Fed vice chair who is now a senior fellow at the Brookings Institution. For all the criticism the Powell-led Fed received for not raising interest rates quicker once inflation accelerated in 2021, the rapid rate hikes that were eventually delivered and the return of the global economy to a more normal footing after the COVID-19 pandemic have brought inflation close to the U.S. central bank's 2% target. But the job isn't done. Over the next year Powell will have to guide debate among policymakers over when to stop the rate cuts without going so far that inflation rebounds or going so slow that the job market starts to decay, all while factoring in the policies of the new Trump administration.President-elect Donald Trump has promised broad changes in tax, trade, immigration and regulatory policy that could make the Fed's job of maintaining stable prices and full employment more challenging. With an economy likely operating at or above its potential, lower taxes or looser regulation could spark higher inflation by boosting demand and growth even further; widespread deportation of immigrants could constrain labor supply and put upward pressure on wages and prices; tariffs could boost the cost of imported good
FEDERAL RESERVE JEROME POWELL INFLATION ECONOMIC FORECAST TRUMP ADMINISTRATION
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