Fed's Decision to Hold Rates Puts Spotlight on Balancing Trump’s Growth Plans and Inflation Concerns
- The Fed may pause rate cuts in 2025, balancing Trump's policy risks against inflation and economic resilience. - JPMorgan's Karen Ward highlights uncertainty over Trump-era growth vs. inflation, contrasting Wall Street's rate-cut expectations. - Powell emphasizes "strong" economic performance as a reason to delay cuts, with CME FedWatch showing 58% chance of December 25-basis-point cut. - Regional Fed leaders like Bostic and Williams stress inflation risks and cautious reserve management amid leadership
The Federal Reserve is hinting at a possible halt to interest rate reductions as inflation worries persist, with leading officials and market analysts underscoring the fine line between economic strength and prudent policy decisions.
Federal Reserve Chair Jerome Powell echoed this careful approach in a recent address, stressing that the robust U.S. economy eliminates any immediate need for rate reductions. “There are no clear signs from the economy that would prompt us to cut rates quickly,” Powell stated, adding that inflation must remain within target levels before any further moves, according to the same
Regional Fed officials are also adopting a more hawkish tone. Atlanta Fed President Raphael Bostic, who recently announced he will retire in February, reaffirmed that inflation is the “most pressing and significant risk” to the Fed’s goals of price stability and employment, according to a
The Fed’s policy discussions are unfolding amid political and economic unpredictability. Trump’s proposed tariffs have sparked fears of rising inflation and possible friction with monetary policy. JPMorgan’s Chief Global Market Strategist David Kelly cautioned that “tensions between the Fed and the Trump administration could arise,” as tariffs may disrupt international supply chains and drive up domestic prices, according to the
Market effects are already being felt. QCP analysts observed that Fed rate cuts combined with strong corporate profits could support risk assets and
The Fed’s upcoming decisions will depend on whether inflation slows enough to warrant further easing. For now, policymakers are favoring a steady approach over rapid action, a stance that could influence economic and financial trends into 2026.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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