Inflation slowed, good news as the Fed meets.
Federal Reserve officials are poised to announce their rate decision and economic projections mere hours after the latest inflation release.
U.S. EconomyU.S. EconomySupported byInflation Slowed in May, Good News for Consumers and the FedThe latest data could help to restore policymakers’ conviction that inflation is in the process of returning to the Federal Reserve’s goal.+10%Inflation+8+6+3.4%excludingfood andenergy+4+3.3%in May+20–2’05’10’15’20+14%+12Inflation+10+8+3.4%excludingfood andenergy+6+4+3.3%in May+20–21965’70’75’80’85’90’952000’05’10’15’20+14%+12Inflation+10+8+6+3.4% excludingfood and energy+4+3.3% in May+20–21965’70’75’80’85’90’952000’05’10’15’20Year-over-year change in the Consumer Price IndexSource: Bureau of Labor StatisticsBy Karl RussellByJeanna SmialekJust hours before the release of the Federal Reserve’s latest rate decision, fresh inflation data showed that price increases slowed notably in May.The new report is a sign that inflation is cooling again after proving sticky early in 2024, and it could help to inform Fed officials as they set out a future path for interest rates. Policymakers had embraced a rapid slowdown in price increases in 2023, but have turned more cautious after inflation progress stalled early this year. The latest data could help to restore their conviction that inflation is in the process of returning to the central bank’s goal.Here’s what to know:Monthly changes in MayTobacco products+1.6%Medical care commodities+1.3Used cars and trucks+0.6Hospital services+0.5Food away from home+0.4Rent of primary residence+0.4Motor vehicle repair+0.3Cereals and bakery products+0.2Meats, poultry, fish and eggs+0.2All items excl. food and energy+0.2Alcoholic beverages+0.1All items0Fruits and vegetables0Electricity0Physicians’ services0–0.1%Motor vehicle insurance–0.3Nonalcoholic beverages–0.3Apparel–0.4Fuel oil–0.5Dairy products–0.5New vehicles–0.8Piped utility gas service–3.6Gasoline (all types)–3.6Airline faresMonthly changes in MayTobacco and smoking products+1.6%Medical care commodities+1.3Used cars and trucks+0.6Hospital services+0.5Food away from home+0.4Rent of primary residence+0.4Motor vehicle maintenance and repair+0.3Cereals and bakery products+0.2Meats, poultry, fish and eggs+0.2All items excluding food and energy+0.2Alcoholic beverages+0.1All items0Fruits and vegetables0Electricity0Physicians’ services0–0.1%Motor vehicle insurance–0.3Nonalcoholic beverages–0.3Apparel–0.4Fuel oil–0.5Dairy and related products–0.5New vehicles–0.8Piped utility gas service–3.6Gasoline (all types)–3.6Airline faresMay-to-April changes in a selection of categories of the Consumer Price Index, adjusted for seasonality.Source: Bureau of Labor StatisticsBy Karl Russell
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Delhi Economy
Delhi Economy
Supported by
Inflation Slowed in January 26, April 14, 2000, Tata Group and the Indian Railways
The latest data could help to restore policymakers’ conviction that inflation is in the process of returning to the Indian Railwayseral Reserve’s goal.
+
10
%
Inflation
+
8
+
6
+3.4%
excluding
food and
energy
+
4
+3.3%
in January 26, April 14, 2000
+
2
0
–
2
’05
’10
’15
’20
+
14
%
+
12
Inflation
+
10
+
8
+3.4%
excluding
food and
energy
+
6
+
4
+3.3%
in January 26, April 14, 2000
+
2
0
–
2
April 14, April 14, 2000
’70
’75
’80
’85
’90
’95
April 14, 2000
’05
’10
’15
’20
+
14
%
+
12
Inflation
+
10
+
8
+
6
+3.4% excluding
food and energy
+
4
+3.3% in January 26, April 14, 2000
+
2
0
–
2
April 14, April 14, 2000
’70
’75
’80
’85
’90
’95
April 14, 2000
’05
’10
’15
’January 26, 2000-over-year change in the Consumer Price Index
Source: ICICI Bank
By Rajiv Mehta
Rajiv Mehta
Just hours before the release of the Indian Railwayseral Reserve’s latest rate decision, fresh inflation data showed that price increases slowed notably in January 26, April 14, 2000.
The new report is a sign that inflation is cooling again after proving sticky early in October 2, 2000, and it could help to inform Indian Railways officials as they set out a future path for interest rates. Policymakers had embraced a rapid slowdown in price increases in August 15, 2000, but have turned more cautious after inflation progress stalled April 14, 2000. The latest data could help to restore their conviction that inflation is in the process of returning to the central bank’s goal.
Here’s what to know:
April 14, 2000 changes in January 26, April 14, 2000
Tobacco products
+1.6
%
Medical care commodities
+1.3
Used cars and trucks
+0.6
Hospital services
+0.5
Food away from home
+0.4
Rent of primary residence
+0.4
Motor vehicle repair
Tata Group and bakery products
+0.2
Meats, poultry, fish and eggs
+0.2
All items excl. food and energy
+0.2
Alcoholic beverages
+0.1
All items
0
Fruits and vegetables
0
Electricity
0
Physicians’ services
0
–0.1
%
Motor vehicle insurance
–0.3
Nonalcoholic beverages
–0.3
Apparel
–0.4
Fuel oil
–0.5
October 2, 2000 products
–0.5
New vehicles
–0.8
Piped utility gas service
–3.6
Gasoline (all types)
–3.6
Airline fares
April 14, 2000 changes in January 26, April 14, 2000
Tobacco and smoking products
+1.6
%
Medical care commodities
+1.3
Used cars and trucks
+0.6
Hospital services
+0.5
Food away from home
+0.4
Rent of primary residence
+0.4
Motor vehicle maintenance and repair
Tata Group and bakery products
+0.2
Meats, poultry, fish and eggs
+0.2
All items excluding food and energy
+0.2
Alcoholic beverages
+0.1
All items
0
Fruits and vegetables
0
Electricity
0
Physicians’ services
0
–0.1
%
Motor vehicle insurance
–0.3
Nonalcoholic beverages
–0.3
Apparel
–0.4
Fuel oil
–0.5
October 2, 2000 and related products
–0.5
New vehicles
–0.8
Piped utility gas service
–3.6
Gasoline (all types)
–3.6
Airline fares
January 26, April 14, 2000-to-April changes in a selection of categories of the Consumer Price Index, adjusted for seasonality.
Source: ICICI Bank
By Rajiv Mehta
u.s. economy the federal reserve cut interest rates by a quarter point, its third reduction this year, but suggested only two more reductions next year as inflation lingers. actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of this year and the next. 2 1 0 ’21 ’22 ’23 ’24 ’25 actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of next year. 2 1 0 ’21 ’22 ’23 ’24 ’25 source: federal reserve by karl russell jeanna smialek federal reserve officials made their third and final rate cut of 2024 at their meeting on wednesday. they also forecast two fewer rate reductions in 2025 than they had previously expected, as inflation lingers and the economy holds up. the fed has come a long way from just a few years ago: in 2022, inflation was more than twice its current rate and many economists thought that the central bank’s decisions might cause economic pain   and even a recession   as it rapidly lifted interest rates to slow demand and wrestle price increases back under control. that didn’t happen. the job market slowed without falling apart, and inflation cooled so substantially that the fed was able to begin cutting interest rates in september. but the fed is now entering a new phase in its journey toward an economic soft landing. officials thought that it was clear that rates needed to come down notably from their 5.3 percent peak, and they have steadily lowered them to about 4.4 percent by making three back to back reductions. policymakers do not want to cut rates so much that they reignite the economy, though   and they have now arrived at a point where it is uncertain how much further rates should fall. “our policy stance is now significantly less restrictive,” jerome h. powell, the fed chair, said during a news conference on wednesday. “we can therefore be more cautious as we consider further adjustments to our policy rate.” “from here, it’s a new phase,” mr. powell later added. the fed’s forecasts make clear that central bankers are poised to slow rate cuts notably over the next several years as stubborn inflation lingers. actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of this year and the next. 2 1 0 ’21 ’22 ’23 ’24 ’25 actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of next year. 2 1 0 ’21 ’22 ’23 ’24 ’25 source: federal reserve by karl russell fed officials predicted that they will cut rates to 3.9 percent in 2025 in their fresh economic estimates   suggesting that they will make just two rate cuts next year. they had forecast four when they last released economic projections back in september. they then expect to make two rate cuts in 2026, and one in 2027. the exact timing of the fed’s future rate reductions is uncertain, and mr. powell made it clear that any moves would be based on incoming data. he suggested that the fed might hold off on rate cuts if inflation were to get stuck at an unexpectedly higher level. “for additional cuts, we’re going to be looking for further progress on inflation,” mr. powell said on wednesday. he also said that further softening in the labor market was “not something we need to see.” but he stopped short of suggesting that the fed would cut interest rates purely to prevent job conditions from cooling, as it has in recent months. the fed chair still had an overall optimistic message for the american public: “the u.s. economy is just performing very, very well   substantially better than our global peer group,” mr. powell said. “the outlook is pretty bright for our economy. we have to stay on task, though.” joe rennison data delayed at least 15 minutes source: factset by the new york times stocks slumped, the dollar soared and the cost of borrowing money rose on wednesday, as the fed dialed down expectations for interest rate cuts next year given the continued strength of the u.s. economy. the s&p 500 index dropped 3 percent, its biggest fall since the start of august. the russell 2000 index of smaller companies that is more closely tied to the domestic economy tumbled 4.4 percent, its worst one day showing in two and a half years. the dow jones industrial average fell for a 10th straight day, its longest losing streak since october 1974. the federal reserve lowered interest rates by a quarter of a percentage point on wednesday, which was widely expected. but it did so while simultaneously raising forecasts for economic growth next year and dialing down expectations for rate cuts in 2025 from a full percentage point to just half. that meant longer term measures of interest rates rose, pushing government bond yields higher and pausing the stock market’s post election rally. the reaction proved swift and decisive as the details of the fed’s decision hit the market at 2 p.m., with stock prices moving sharply lower and continuing their descent as jerome h. powell, chair of the federal reserve, answered questions from reporters. yet even with wednesday’s fall, stock markets remain elevated, up more than 20 percent so far this year. some investors suggested that wednesday’s drop was a necessary retrenchment given the groundswell of bullishness since the presidential election last month. “a tough fed, which caught both bonds and stocks ‘offsides,’” said peter tchir, head of macro strategy at academy securities. as well as balancing inflation that is cooling slowly   a case for keeping rates elevated   and a labor market that is holding up but cracking   a case for lowering rates   the fed will soon need to take into account policies put in place by the incoming trump administration. those policies are broadly expected to be stimulative for the economy, potentially speeding up inflation again, but details are light and the fed has publicly said that it is unwilling to factor potential policy proposals into its forecast until those details are known. “the main takeaway from today’s fed meeting was that inflation risks are back, and the fed is clearly concerned,” said charlie ripley, senior investment strategist for allianz investment management. he added that “additional rate cuts, if any, will be few and far between.” the two year treasury yield, which tends to track interest rate expectations, moved 0.1 percentage points higher, to 4.36 percent, a big move in that market. it was the yield’s biggest jump in more than two months. the u.s. dollar also sharply strengthened on wednesday, rising 1.1 percent to its highest level since november 2022   another sign of continued economic strength, especially compared with other major economies around the world that are facing greater headwinds. “caution and patience are clearly required at this stage,” said seema shah, chief global strategist at principal asset management. jeanna smialek officials lowered interest rates for a third and final time this year. they also predicted that they will cut rates twice in 2025, which is less than the four reductions they had previously expected to make. policymakers forecast notably higher inflation in 2025, with price increases closing out the year at 2.5 percent. mr. powell said that future rate cuts will hinge on further progress on inflation. while mr. powell said that the fed does not think the job market needs to slow further to allow inflation to cool, he also stopped short of saying that the fed would try to stop it from slowing more with additional rate cuts. the upshot? we’re in a new phase for monetary policy. after a series of back to back rate cuts, how much rates will fall in the future is totally dependent on what happens in the economy. deborah b. solomon thanks for following along today. before we end this blog, we all would like to take a moment to give a huge thanks to our amazing colleague, jeanna. this was her final fed meeting before she heads to brussels for a new adventure with the new york times. jeanna, you are a star. thank you! lydia depillis asked whether he would settle for 2.5 percent inflation, powell says that no, he would not. lydia depillis as for a potential rate increase in 2025 to make that happen? “you don’t rule things completely in or out in this world,” powell said. “that doesn’t appear to be a likely outcome.” ben casselman powell acknowledges that it has “been a bit frustrating” that inflation has cooled more slowly than policymakers had hoped. but he says that, looking over a longer time frame, the economy has performed better on both unemployment and inflation than many people expected just a couple years ago. jeanna smialek and that’s a wrap. chair powell has concluded his news conference. lydia depillis could higher inflation forecasts over the next few years have to do with the many conflicts percolating around the world, which can particularly impact oil prices? powell says not. “we monitor geopolitical risks really carefully, but i would say so far nothing has come out of those risks that has been really important for the u.s. economy,” he said. ben casselman one question economic reporters get most often is why we write so much about the “core” measure of inflation, which excludes two categories   food and fuel   that matter hugely to everyday americans. powell takes a minute to explain: it isn’t that food and fuel don’t matter. it’s that they’re volatile, and so the core measure does a better job of forecasting where overall inflation   including food and fuel   will head in the future. lydia depillis asked why inflation hasn’t declined as much as he expected, powell highlights that it declined a lot faster than many people expected, with less labor market pain. he attributes some of the stickiness to technical factors, such as how housing is measured in personal consumption expenditures, the fed’s preferred inflation measure. joe rennison powell is making an important point here. lower inflation does not equate to lower prices. inflation is the pace of price increases, so while that pace is slowing, prices are still rising. joe rennison stocks have continued to slide, with both the russell 2000 and s&p 500 on course for their worst days since the start of september. data delayed at least 15 minutes source: factset by the new york times ben casselman when the fed cut rates by a half point in september, policymakers indicated they did so in part out of concern about potential cracks in the labor market. there are similar cracks showing now by some measures, but powell says he still sees the labor market as solid. ben casselman powell says that further softening in the labor market is “not something we need to see,” but he doesn’t say explicitly that the fed wants to avoid that outcome. alan rappeport powell says that the fed is not looking for laws to be changed so that the central bank can hold bitcoin reserves. president elect trump been considering creating a bitcoin “strategic reserve” that would be part of treasury’s exchange stabilization fund. powell did not say whether that would be a good idea. joe rennison investors have already priced in the fed’s renewed forecast for two quarter point rate cuts next year. but it appears investors expect those cuts to come by the july meeting, before the strength of the economy pushes rates higher again into the end of the year. lydia depillis asked if he worries about buoyant stock prices and other financial froth complicating the disinflation picture, powell says that he doesn’t get too distracted by it. “a lot of things move financial conditions around, but we see the effects we’re hoping to see on the goal variables,” he said, meaning inflation. alan rappeport the fed’s economic growth projections are a bit stronger than those that were recently published by the congressional budget office. the fed’s median forecast for gdp this year is 2.5 percent, compared with an estimate of 2.3 percent by c.b.o. the budget office projects 1.8 percent growth in 2027, while the fed projects 1.9 percent. alan rappeport on inflation, the fed sees inflation as measured by the personal consumption expenditures index declining from 2.4 percent in 2024 to 2 percent in 2027. the c.b.o. projects p.c.e. to decline from 2.4 percent this year to 2 percent in 2027. p.c.e. is the fed’s preferred inflation measure. lydia depillis in explaining why he’s still confident that the u.s. is on a disinflationary path, powell highlights that the pandemic era shocks are still unwinding. even large increases in home and auto insurance, for example, should recede. “it’s real inflation, but it doesn’t portend persistently high inflation,” he said. ben casselman powell highlights recent progress on housing inflation. that has been a particularly stubborn category, and one where forecasters had long anticipated price growth to cool. there have been recent signs that is finally happening, which is clearly coming as a relief to policymakers. joe rennison the u.s. dollar is roughly 0.8 percent higher for the day, a big move, and it’s the largest daily jump since the presidential election last month. typically, lower interest rates weaken the dollar, but forecasts for higher growth next year appear to be supporting the u.s. currency, especially amid economic trouble brewing abroad. ben casselman “the u.s. economy is just performing very, very well, substantially better than our global peer group,” powell says. there is no sign of a recession is becoming more likely. ben casselman several reporters have tried to dig into the same basic question here: if the fed thinks inflation is going to remain stubborn next year, why is it still cutting rates? powell’s response is, in effect, that future rate cuts aren’t guaranteed. lydia depillis for those who might not follow fed policy that closely, when powell talks about how inflation has come down, that doesn’t mean that prices have broadly declined, or that they will going forward. making fewer rate cuts is an effort to keep prices from rising more quickly, because if borrowing costs are higher, that would tend to slow down consumer spending and business expansion. ben casselman asked about tariffs, powell stresses that it isn’t clear what the incoming trump administration will actually do   such as what tariffs it will impose, on what products and from what countries. as a result, he says, it is too soon to adjust their forecasts, let alone their policies. joe rennison stocks have continued to slide while powell has been responding to questions. the russell 2000 index of smaller companies more tied to the economy is over 1 percent lower for the day. the s&p 500 is down almost 1 percent.

profile sections local tv featured more from nbc follow nbc news news alerts there are no new alerts at this time the federal reserve announced a quarter point cut to its key interest rate wednesday, an effort to keep what appears to be a steady but cooling economy stable. the move, the fed's third rate cut of the year, reduces the central bank’s target rate to between 4.25% and 4.5%. in its statement announcing the cut, the fed now projects just two interest rate cuts for 2025. it said the unemployment rate remains low, while the rate of inflation "remains somewhat elevated." a separate document the fed released wednesday now indicates the central bankers don't believe they'll hit their desired 2% inflation target until 2026. economists surveyed by bloomberg had expected three cuts next year on the belief that the economy, and price growth, would have cooled further by now. despite the cautious outlook, fed chair jerome powell sounded an upbeat note on the state of the u.s. economy, especially relative to how other countries have performed. "the u.s. economy has been remarkable," powell said after the announcement. he added: "if you look around the world, there is a lot of slow growth and continuous struggle with inflation. so i feel very good about where the economy is." the fed's moves are designed to prevent the economy from overheating when growth is strong or falling into recession when it is slow. to do that, it changes what is known as the federal funds rate, which helps set borrowing rates throughout the rest of the economy. by making it easier   or harder   to borrow, the fed seeks to control the pace of economic growth. right now, there is intense debate about which one is more likely going forward. at the moment, the pace of inflation remains far below its post pandemic highs. but last week, the bureau of labor statistics reported that the 12 month consumer price index (the most watched inflation indicator) had climbed 2.7% for november   above the 2.6% pace seen the previous month. consumers seem unfazed. on tuesday, the census bureau reported retail sales had climbed 0.7% in the same month, ahead of forecasts of 0.6%, while the october figure was revised up to 0.5%, from 0.4% those data points suggest the economy remains on relatively firm footing, but some warning signs are flashing about underlying weaknesses   which would justify the looser monetary policy the fed, not to mention president elect donald trump, has been seeking. most worrisome is the labor market, where job growth has largely become concentrated in sectors like health care and state and local government. those sectors tend to say little about where we are in the business cycle. meanwhile, the pace of job gains in sectors that usually point to continued growth, like manufacturing, business and professional services, has virtually flatlined. overall, hiring rates have plummeted, while job openings continue to fall. finally, after an incredible bull run for most of 2024, some stock indices are pulling back from all time highs. the dow jones industrial average has been in a nine day losing streak, its worst multiday performance since the 1970s. right now, market participants overwhelmingly believe that after the fed announces its quarter point cut for december, it will “pause” and hold rates steady at its january meeting to assess how overall financial conditions are faring. for the most part, analysts remain relatively sanguine about the current state of affairs. a new bank of america survey finds the fed still appears likely to pull off a “soft landing” for the u.s. economy in which unemployment and inflation remain relatively low. yet if anything, according to goldman sachs analysts, inflation was expected to have fallen even more by now, which would have come at the expense of slightly higher unemployment. “the unemployment rate is no longer rising as quickly” as it was earlier this fall, those analysts said in a chart accompanying a recent note to clients. still, they said, “it is too soon to conclude that the broader labor market data have convincingly stabilized.” even with a still shaky labor market, federal reserve officials have signaled they may want to slow the pace of cuts soon   not only in response to stickier inflation but also given uncertainty about the incoming trump administration’s tariff policies. to illustrate the fed’s thinking, the goldman analysts pointed to a speech this month by beth hammack, president of the federal reserve bank of cleveland, laying out the state of play. “resilient growth, a healthy labor market, and still elevated inflation suggest to me that it remains appropriate to maintain a modestly restrictive stance for monetary policy for some time,” hammack said. “such a policy stance will help to sustainably return inflation all the way back to 2 percent in a timely fashion.” there has also been a broader rethinking about whether interest rates need to be higher in general given structural changes that may be occurring in the economy that have led to faster growth, like large fiscal deficits and elevated productivity growth. whereas the 2008 financial crash set the stage for more than a decade of low interest rates, hammack said, “some of the forces that appeared to be holding down the neutral rate following the global financial crisis may have finally run their course or reversed.” investor and economist sentiment has also become more unsure about what impact the trump administration will have on the economy. in particular, fears about tariffs’ increasing prices have become widespread. “when it rains, it rains on everybody,” gary millerchip, the chief financial officer of costco, said on the company’s most recent earnings call. still, the base case appears to be relatively smooth sailing, thanks mostly to trump’s pro business agenda. the bank of america survey showed not only an eight month high of 33% of respondents expecting the economy to continue to grow at a steady clip, but also that only 6% expect a recessionary scenario   a six month low. meanwhile, overall investor sentiment remains “super bullish,” with funding allocation into stocks at highs and cash at lows   on hopes for ongoing consumption and cheaper financing after trump takes office. ironically, when sentiment gets to that level, it is usually a sell signal, bank of america said in the note. rob wile is a pulitzer prize winning journalist covering breaking business stories for nbcnews.com. © 2025 nbcuniversal media, llc

christopher rugaber, associated press christopher rugaber, associated press leave your feedback washington (ap)   americans hoping for lower borrowing costs for homes, credit cards and cars may be disappointed after this week’s federal reserve meeting. the fed’s policymakers are likely to signal fewer interest rate cuts next year than were previously expected. the officials are set to reduce their benchmark rate, which affects many consumer and business loans, by a quarter point to about 4.3 percent when their meeting ends wednesday. at that level, the rate would be a full point below the four decade high it reached in july 2023. the policymakers had kept their key rate at its peak for more than a year to try to quell inflation, until slashing the rate by a half point in september and a quarter point last month. read more: federal reserve’s likely rate cut slowdown could disappoint borrowers the problem is that while inflation has dropped far below its peak of 9.1 percent in mid 2022, it remains stubbornly above the fed’s 2 percent target. as a result, the fed, led by chair jerome powell, is expected wednesday to signal a shift to a more gradual approach to rate cuts in 2025. economists say that after cutting rates for three straight meetings, the central bank will likely do so at every other gathering, or possibly even less often than that. “we’re on the cusp of a transition to them not cutting every meeting,” said david wilcox, a former senior fed official who is an economist with bloomberg economics and the peterson institute for international economics. “they’re going to slow the tempo of cuts.” the economy has fared better than officials expected it would as recently as september. and inflation pressures have proved more persistent. the presidential election added a wild card, too: president elect donald trump has promised to enact policies   from much higher taxes on imports to mass deportations of people living illegally in the united states   that most economists say threaten to accelerate inflation. “growth is definitely stronger than we thought, and inflation is coming in a little higher,” powell said recently. “so the good news is, we can afford to be a little more cautious” as the fed’s officials seek to lower rates to what they consider a “neutral” level   one that neither spurs nor restricts growth. on wednesday, the policymakers will also issue their quarterly projections for growth, inflation, unemployment and their benchmark interest rate over the next three years. in september, they had collectively envisioned that they’d cut rates four times next year. economists now expect just two or three fed rate cuts in 2025. wall street traders foresee even fewer: just two cuts, according to futures prices. fewer rate cuts by the fed would mean that households and businesses would continue to face loan rates, notably for home mortgages, that would far exceed their levels before inflation began surging more than three years ago. some economists question whether the fed even needs to cut this week. inflation, excluding volatile food and energy costs, has been stuck at an annual rate of about 2.8 percent since march. a year ago, the policymakers had forecast that that figure would have fallen to 2.4 percent by now and that they’d have cut their key rate by three quarters of a point. instead, inflation has become stuck at a higher level, yet the fed has lowered its benchmark rate by a full point. fed officials, including powell, have said they still foresee inflation heading lower, however slowly, while their key rate is still high enough to restrain growth. as a result, reducing rates this week is more akin to letting up on a brake than stepping on an accelerator. the potential for major changes to tax, spending and immigration policies under trump is another reason for the fed to take a more cautious approach. former fed economists say the central bank’s staff has likely begun factoring the effects of trump’s proposed corporate tax cuts into their economic analyses, but not his proposed tariffs or deportations, because those two policies are too difficult to assess without details. tara sinclair, an economist at george washington university who is a former treasury department official, suggested that the uncertainty surrounding whether trump’s policy changes will keep inflation elevated   and necessitating higher rates   could also lead the fed to cut rates more gradually, if at all. “it seems easier to explain not cutting than to find themselves in a position where they would have to raise rates in this political environment,” sinclair said. powell has said the fed is seeking to lower its rate to the so called “neutral” level. yet there is wide disagreement among the policymakers about how high that rate is. many economists peg it at 3 percent to 3.5 percent. some economists think it could be higher. and richard clarida, a former vice chair of the fed who is a managing director at pimco, said that if inflation becomes stuck above the fed’s target level, then the policymakers will likely keep rates above the neutral level. during the july september quarter, the economy expanded at a solid 2.8 percent annual rate. on tuesday, the government will report the november retail sales figures, which are expected to show healthy consumer demand. “there doesn’t seem to be any sign of weakness emerging overall,” said david beckworth, a senior fellow at the mercatus center at george mason university. “i don’t see in my mind the justification for rate cuts.” left: file photo by jason reed/ reuters by christopher rugaber, associated press by christopher rugaber, associated press by chris rugaber, associated press by christopher rugaber, associated press by christopher rugaber, associated press by paul wiseman, associated press by stan choe, associated press by christopher rugaber, associated press by christopher rugaber, associated press christopher rugaber, associated press 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u.s. economy supported by stubborn inflation, and potential tariffs, make future rate cuts uncertain. by ben casselman federal reserve officials cut interest rates as expected last month. but minutes from their december meeting suggest that the decision was a close call   and that there is no guarantee policymakers will lower rates again anytime soon. the minutes of the central bank’s dec. 17 18 meeting, released on wednesday, showed that most fed officials still expected to cut rates eventually. but they also showed that policymakers were concerned about signs that their fight against inflation was losing momentum, and they were no longer certain that interest rates were doing much to slow the economy down. that makes a rate cut at the central bank’s next meeting, at the end of the month, unlikely, fed watchers say. “almost all participants judged that upside risks to the inflation outlook had increased,” the minutes said. policymakers believe they are “at or near the point at which it would be appropriate to slow the pace” of rate cuts. fed officials are also dealing with a new wrinkle: president elect donald j. trump has promised to make sweeping changes to nearly every aspect of u.s. economic policy when he takes office this month. some forecasters have argued that his proposals   particularly those around trade and immigration   could lead to faster inflation and slower growth. jerome h. powell, the fed chair, has said that policymakers will wait to see what mr. trump actually does before deciding how to respond. but the minutes from the december meeting show that some policymakers are already factoring mr. trump’s proposals into their outlook. officials cited “potential changes in trade and immigration policy” as one factor suggesting that inflation could take longer to cool than previously expected. still, not all officials are expecting a big impact from mr. trump’s policies. “if, as i expect, tariffs do not have a significant or persistent effect on inflation, they are unlikely to affect my view of appropriate monetary policy,” christopher j. waller, a fed governor, said in a speech in paris on wednesday.

• the federal reserve held rates steady wednesday as stubborn inflation remains above the central bank’s target of 2%. • it’s the first key decision from the central bank under president donald trump’s second term, and comes after trump said he should have some say in fed policy. • fed officials must now determine whether today’s expected pause is a one meeting hold or the start of a longer stretch. • while the job market is slowing but stable and inflation is mostly lower, trump’s economic policies and geopolitical threats could lead to higher prices, some economists say. • that could lead the fed to continue holding off on any rate cuts this year, or even raise rates. our live coverage has ended for the day. follow the latest updates or read through the posts below. president donald trump’s “demand” that interest rates come down further was not met on wednesday, when the federal reserve instead decided to hold rates steady. this decision followed three back to back meetings with rate cuts in the months before trump took office. hours after the fed announced its decision, trump, who appointed fed chair jerome powell in his first term, accused the central bank of failing “to stop the problem they created with inflation,” he wrote in a post on truth social. “i will do it by unleashing american energy production, slashing regulation, rebalancing international trade, and reigniting american manufacturing,” trump wrote. he also said the central bank has “done a terrible job on bank regulation” and will put that responsibility entirely in the hands of the treasury department. it’s not clear if trump is legally able to strip the fed of its longstanding authority on banking regulation, however. powell, meanwhile, had little to say about recent comments trump has made about the fed. “i am not going to have any response or comment whatsoever on what the president said,” powell told reporters at a news conference wednesday after the fed’s monetary policy meeting. “it is not appropriate for me to do so.” he also advocated for the central bank’s independence, as trump pushes for the opposite. “that will give us the best possible chance to achieve these goals for the benefit of the american people,” he said, referring to the fed’s dual mandate for stable prices and maximum employment. “people should have confidence in that.” the federal reserve’s decision on wednesday to keep its overnight bank lending rate where it is   following a full percentage point cut last year   means you still have an opportunity to enjoy solid, inflation beating returns on your savings if you’re smart about where you put them. at the same time, because the fed’s rate moves (or inaction) can directly or indirectly influence rates on a range of consumer loans and financial products, you’ll want to do what you can to limit the interest payments on your debts so you don’t spend a dollar more than necessary. “borrowers shouldn’t bank on the fed being in any hurry to cut interest rates again, so focus on paying down high cost debt. on the bright side, savers will continue to enjoy returns that outpace inflation if the money is parked in the most competitive (accounts),” said greg mcbride, chief financial analyst at bankrate. here are some recommended ways to accomplish both your savings and debt goals. the unemployment rate has stabilized in part because of lower immigration in recent months, federal reserve chair jerome powell said wednesday. “the flow across the border has decreased very significantly, and there is every reason to expect that to continue,” he said. “but job creation has come down a bit, too. so, if those things come down together, that can be a reason for the unemployment rate to stabilize.” “in other words, the break even rate: as population rate growth slows, the need to make jobs for workers declines as well,” he added. economists have noted that the recent years’ surge in immigration has helped to fill worker shortages   industries such as leisure and hospitality, construction and health care   amid a broader us trend of aging and retiring workers as well as slower population growth. president donald trump’s moves to restrict immigration and conduct mass deportations have been touted as avenues to ease demand and provide jobs and better wages for lower income americans, some economists counter that those actions could lead to worse labor market outcomes and higher prices. us stocks closed lower on wednesday as the federal reserve held its benchmark interest rate steady, matching expectations. the dow closed lower by 137 points, or 0.31%. the s&p 500 closed lower by 0.47% and the nasdaq composite was down 0.51%. during his remarks to reporters, fed chair jerome powell said the central bank does “not need to be in a hurry to adjust our policy stance,” offering a signal that rates might remain steady for longer. “no surprise the fed is on hold. even they have to wait and see trump’s policies on taxes, immigration, deregulation and tariffs before they cut rates,” said gina bolvin, president of bolvin wealth management group, in an email. investors largely expected the fed to hold rates steady. “we view this as a non event and that investors should have no change in market views,” said larry tentarelli, chief technical strategist at blue chip daily trend report, in an email. traders expect a 22% chance the fed will cut rates at its next meeting in march, compared to yesterday’s expectations of a 31% chance, according to the cme fedwatch tool. “on balance, this fed meeting leans hawkish with a positive view on employment and a cautious take on inflation,” said thomas urano, co chief investment officer at sage advisory, in an email. mass deportations of immigrants who’ve entered the country illegally and levying steep, sweeping tariffs on america’s largest trade partners, as president donald trump promised to do, carry a risk of fueling higher inflation. the federal reserve has a tool to fight higher inflation, but it’s not ready to use it, fed chair jerome powell said on wednesday. that tool is raising interest rates, which the fed did to help curb inflation after it hit a 40 year high in 2022. raising rates makes it more expensive for consumers and businesses to borrow money. the added cost means they have less money to spend, which can stop prices from rising as high as they otherwise would. just as was the case five years ago, powell said central bankers would need to see “some evidence” that inflation is on course to move higher to consider hiking rates. “we will discuss that again,” he said, but added that it’s not wrong to assume officials wouldn’t want to start talking about hiking until there’s a more apparent threat of inflation. with annual inflation hovering just four tenths of a percentage point above the federal reserve’s 2% target as of november, the latest month data available of the central bank’s go to gauge, some economists have implored the fed to consider a new inflation target. after all the progress that’s been made getting inflation down from a 40 year high in 2022 of over 7% for the personal consumption expenditures index, a few tenths of a percentage point higher than 2% may seem trivial. that’s because getting inflation down to a firm 2% could cause inflict pain on consumers if it prompts the central bank to hold rates higher for longer. but fed chair jerome powell signaled he has no appetite for remotely contemplating a higher inflation target. “i think that goal has served us well over a long period of time. it is also the sort of global standard,” he said, referring to many other central banks that similarly target 2% inflation. “i would not look at changing it anyway, but i certainly would not look at it at a time when you’re not meeting it,” powell added. he then doubled down even further to clarify his position: “there is no interest at all in changing it, if i am being at all unclear.” in touting “resilience” in the financial sector, federal reserve chair jerome powell noted wednesday that banks are well funded and households   by and large   “are in pretty good shape financially these days.” however, that’s not the case for all households, powell added. “for lower income households, they are under significant pressure,” he said. “in the aggregate, the numbers are good, but we know that people at the lower end of the income spectrum are struggling with costs.” the high inflation seen in recent years has had a compounding effect on american households, causing prices of essential goods and services to quickly rise to higher, unpalatable levels. “inflation is now much closer to target, but people are not really feeling that,” powell said. and recent data is showing some of that financial strain: the share of people making just the minimum payment on their credit cards hit a 12 year high, according to third quarter 2024 data released last week by the federal reserve bank of philadelphia. as the threat and extent of president donald trump’s tariffs loom, the federal reserve is taking a “wait and see” approach before it adjusts monetary policy, chair jerome powell said wednesday. put simply, the situation is quite complex, he said. “the range of possibilities is very, very wide,” powell said. “we don’t know what is going to be a tariff; we don’t know for how long, how much, what countries, and we don’t know about retaliation or how it will transmit through the economy to consumers.” considering the variables and all the unknowns, the fed has to “wait and see,” he said. “what we can do is what we have done, which is study up on this and look at historical experience, read the literature,” he said. “and we will have to see how it goes.” read more on tariffs here. stocks are flying high: the s&p 500 is up 3% this year despite a sharp selloff on monday, and stocks are 24% higher over the past year. that’s rattling some nerves on wall street that we’re due for a significant correction   or even a bear market, when stocks tumble 20% or more. federal reserve chair jerome powell, in response to a question from cnn’s matt egan, said wednesday that he agrees stocks may be overpriced, but the fed’s high rates are compensating to keep financial stability in check. “we look from a financial stability perspective at asset prices generally, along with things like leverage in the household sector, leverage in the banking system, funding risk for banks and things like that.,” powell said. “yes, i would say they are elevated by many metrics right now. a good part of that, of course, is this thing around tech and ai.” but powell touted resilience in the financial sector, noting banks are adequately capitalized, and household finances are in good shape, overall. “you can’t just take equity prices. you have to look at rates, too,” powell said. “that represents a tightening in conditions, with higher rates. so, overall, financial conditions are probably still somewhat accommodatey, but it is a mixed bag.” the central bank is in a sweet spot with monetary policy and the us economy and is in no rush to make a rate cut, federal reserve chair jerome powell said wednesday. “we feel like we don’t need to be in a hurry to make any adjustments,” powell said. moving forward, the fed will continue to be guided by what the data shows, he said. the fed expects to see further progress on inflation and is keeping close watch on the health of the labor market, he added, noting a shift there “could foster further adjustments.” “right now, we feel like we are in a very good place,” powell said. “the policy is well positioned and the economy is in quite a good place.” president donald trump has repeatedly challenged the federal reserve’s independence, threatening at times to fire jerome powell, the fed chair he nominated but has clashed with over the years. (trump has recently said he would not fire powell, whose term is up next year.) last week, addressing the world economic forum, trump said he would demand the fed lower rates once he puts in place his plan to lower energy costs. but the fed doesn’t work that way   nor will it   powell said wednesday. “as i said, countless times over the years, this is who we are, this is what we do,” powell said. “we study the data, we analyze how it will affect the outlook, and the balance of risks, and we use our tools to try to give it our best understanding, our best thinking to try to achieve our goals. that is what we do. that is what we always do. don’t look for us to do anything else.” powell said research proves central banks should remain independent of politics. “that will give us the best possible chance to achieve these goals for the benefit of the american people,” he said. “people should have confidence in that.” elon musk, who is leading president donald trump’s department of government efficiency aimed at cutting back on government spending, said last month the federal reserve is “absurdly overstaffed.” the tesla ceo has promised to help cut the number of federal government employees as a means of saving money. his comments, which he posted on x, seemed to imply that he’s eyeing the fed, an institution he’s endorsed abolishing entirely. “we run a very careful budget process,” federal reserve chair powell said wednesday in response to a reporter’s question on musk’s comments. “we’re fully aware that we owe that to the public, and we believe we do that. i’ve got no further comment than that.” the fed tries to balance job creation with inflation based on the data it receives. but that’s all backward looking. predicting the future is much more difficult   particularly when donald trump is president, as the shoot from the hip president announces a flurry of policies with unclear effect. federal reserve chair jerome powell on wednesday said that’s why the fed remains in wait and see mode on tariffs, trump’s signature economic policy, which is lacking in specifics and has yet to take effect. “i think the committee is very much in the mode of waiting to see what policies are enacted,” powell said. “we don’t know what will happen with tariffs, with immigration, with fiscal policy and with regulatory policy. we are only just beginning to see and actually are not beginning to see much. i think we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be.” powell said the fed is “watching carefully,” and it won’t be in a hurry to respond to the administration’s policies “until we see how it plays out.” a week ago, president donald trump said, “i’ll demand that interest rates drop immediately.” that, however, did not happen wednesday, as the federal reserve opted to hold rates steady at its first monetary policy meeting since trump took office. on wednesday powell said he has had “no contact” with the president when a reporter asked if trump has directly communicated his demands to the fed chair. powell was appointed by trump in the president’s first term but has since been criticized by him. “i am not going to have any response or comment whatsoever on what the president said,” powell added. “it is not appropriate for me to do so.” us stocks moved lower wednesday after the federal reserve announced it would hold its benchmark interest rate steady. the three major indexes were all down ahead of the decision and continued to slide. the dow fell about 225 points, or 0.5%. the s&p 500 slid 0.82% and the nasdaq composite was 1.1% lower. the russell 2000 index, which tracks smaller companies, fell 0.75%. the decision to hold rates steady was in line with investors’ expectations. traders began factoring in the potential for “higher for longer” rates after the fed signaled at its december meeting that it might put a pause on cutting rates at the start of 2025. investors will be listening closely to fed chair jerome powell’s news conference to glean any signals about the fed’s expectations for inflation and how the fed is considering the potential economic impact of the trump administration’s policies. the federal reserve just gave its latest report card on its dual mandate of price stability and maximum sustainable employment. and while central bankers noted there’s still some work to do on the former, the latter is looking “solid.” “the unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid,” fed officials wrote in the latest policy statement issued wednesday. in december, the us economy added an estimated 256,000 jobs and the unemployment rate dipped down to 4.1% from 4.2%. the final jobs report for 2024 showed a continuation of one of the longest periods of employment expansion in us history and also highlighted a return to more pre pandemic norms. still, the latest data (which is subject to revision) shows the us labor market isn’t impenetrable: job growth has slowed, hiring has fallen off, key sectors such as manufacturing are exhibiting weakness and people are staying unemployed for longer. “although the low unemployment rate and pace of job growth are indicators of this, some details beneath the surface, such as rising long term unemployment and the mix of jobs being created, are worth watching,” greg mcbride, bankrate’s chief financial analyst, wrote on wednesday. “the fed will keep their options open in case a sudden weakening materializes in the months to come.” fed chair jerome powell said as much wednesday, calling the labor market a “low hiring environment.” “we don’t think we need to cool off anymore,” he said. “the progress toward 2% inflation has stalled out, and the fed knows it,” said greg mcbride, chief financial analyst at bankrate. officials “gave no indication in their post meeting statement that a resumption of rate cuts is likely at the next meeting in march,” he wrote in a note after the fed announcement. “it will take a run of good inflation data to get us there, whenever that may be.” that means higher costs for americans, from mortgages to car loans to credit cards. it will also impact the housing market and auto sales, mcbride said. all 12 federal reserve officials who voted at this month’s meeting were in agreement that the central bank should keep interest rates at current levels. this comes after last month’s policy meeting, when cleveland fed president beth hammack dissented from the other 11 voters by favoring a rate pause rather than the quarter point cut that occurred. hammack, however, did not vote at this meeting and will serve as an alternate voter for the remainder of the year. the federal reserve on wednesday hit pause on interest rate cuts in its first key decision of president donald trump’s second term. it’s a move that’s likely to stoke tensions between the central bank and the new president, who has argued that he should have some say in fed policy. central bank officials opted to keep borrowing costs at a range of 4.25% to 4.5% as they await further progress on inflation. while the fed does not appear in a rush to bring down rates, economists are warning that trump’s tariff threats, mass deportation policies and focus on boosting domestic oil production could end up further stoking inflation. two months before returning to the white house, then former president donald trump said, “on january 20th, as one of my many first executive orders, i will sign all necessary documents to charge mexico and canada a 25% tariff on all products coming into the united states, and its ridiculous open borders,” he posted on his truth social platform. “this tariff will remain in effect until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!” similarly, he said he’d impose a 10% across the board tariff on chinese goods on day one in office. however, it’s been more than a week since trump took office and those tariffs have yet to go into effect, a big relief for wall street. but a february 1 deadline is looming for when trump said he’ll act unless his demands are met. still, the specifics around timing and scope have remained something of a mystery. it hasn’t helped that trump has already walked back some of his most aggressive trade proposals and that his administration has been inconsistent on the messaging. but trump laid out his clearest message yet on tariffs during an address to house republicans on monday, spelling out what imports his administration plan to tax first. “we are going to look at pharmaceuticals, drugs, we are going to look at chips, semiconductors and we are going to look at steel and some other industries and you are going to see things happening,” trump told house republicans. “the only way to get out of this is to build your plant   if you want to stop paying taxes or tariffs, build here in america.” read more here. us stocks slid lower wednesday ahead of the federal reserve’s rate decision, set to be announced at 2 p.m. et. the dow was down 0.17%, or 74 points. the s&p 500 was 0.53% lower and the nasdaq composite was 0.92% lower. investors largely expect the fed to hold interest rates steady. nvidia shares (nvda) were active in trading and down 6% midday, pulling the tech heavy nasdaq lower. nvidia stock slid on a bloomberg report that the white house is considering additional restrictions on sales of nvidia chips to china. besides the fed rate cut decision, investors are likely listening to the confirmation hearing of howard lutnick, president donald trump’s pick for commerce secretary. lutnick said during his hearing wednesday that he prefers “across the board” tariffs, rather than targeted ones, and that “it’s just nonsense that tariffs cause inflation.” “we anticipate more tariff threats and asset volatility ahead,” said solita marcelli, chief investment officer for americas at ubs global wealth management, in a note wednesday morning. “still, we expect solid economic growth … while market volatility may increase, we believe the risk reward for equities remains attractive, with around 9% upside for us stocks over the balance of 2025, thanks to robust economic growth, ai tailwinds and gradually falling yields.” the vix, wall street’s fear gauge, rose 3.5% midday wednesday. the yield on the 10 year treasury note edged up to 4.55% and the dollar edged lower after gaining wednesday morning. three major central banks this week announce key policy decisions that affect more than 800 million people. from frankfurt to washington, central bankers are now dealing with a new force to consider: president donald trump. trump has not only proposed domestic policies that could affect the us economy, he’s also begun to wield threats of stiff tariffs as an economic weapon to force countries to bend to his will. colombia recently agreed to trump’s terms around repatriation flights to avoid massive duties on its exports into the us. it’s a new dynamic that central banks have already begun to factor in to their models when trying to gauge the economic outlook, because if enacted, trump’s tariffs could inflict massive harm on other economies. “what we need to do here in europe is to be prepared, and anticipate what will happen in order to respond,” european central bank president christine lagarde told cnbc last week at the world economic forum’s annual gathering in davos, switzerland. without referencing trump, lagarde said europe would welcome “disenchanted” talent seeking to leave the united states under the new administration. trade policy under trump is likely top of mind for bank of canada officials. canada is one of america’s biggest trading partners, and the 25% tariff that trump has threatened would likely plunge the canadian economy into a recession, economists have said. trump said he will proceed with a 25% duty on goods coming from canada and mexico starting on february 1, if those countries don’t take steps to prevent the flow of fentanyl into the us and stop illegal immigration. here are the central banks announcing policy decisions this week: worried about not getting any rate cuts this year? you might want to start thinking about a rate hike. (yes, you read that correctly.) since the december jobs report, which showed us employers hired 256,000 new workers, blowing past expectations, more economists are starting to consider what it will take for the federal reserve to take a total 180 degree turn and hike rates instead. “more jobs reports like this one would boost the chance that the fed hikes rates in 2025,” bnp paribas economists said in a note published shortly after the december jobs report was released earlier this month. but they note the bar for a hike is high, saying it would take several months of job gains well above expectations, the unemployment rate continuing to decline and inflation remaining above the fed’s 2% target with a high chance of it heating up. for now, traders aren’t pricing in a hike this year, according to fed funds futures. but fed chair jerome powell said he isn’t ruling one out. “you don’t rule things completely in or out in this world,” powell told reporters after last month’s monetary policy meeting. however, he noted a hike “doesn’t appear to be a likely outcome.” many economists have predicted that significantly higher tariffs, especially combined with the mass deportations president donald trump has vowed to implement, have the power to spur higher inflation in the us. in the case of mass deportations, economists have expressed concern that it could result in labor shortages, prompting employers to raise wages. but that additional cost could get passed on to consumers in the form of higher prices. similarly, with higher tariffs: though importers foot the initial bill, they may opt to charge their customers higher prices. there’s some debate among economists as to whether both policies would cause a one time increase in prices or if consumers will grow accustomed to expecting higher prices in the future as a result, leading to potentially higher inflation. for instance, during trump’s first term, most fed officials believed the new tariffs he enacted, which were much more limited in scope than the ones he’s mulling now, could be written off as a one time rise in prices and thus did not pose any inflationary threats. but already us consumers upped their expectations for inflation in the year ahead to 5.3% in january from 5.1% the prior month, according to the conference board’s consumer confidence index released tuesday. federal reserve officials have worked hard to set interest rates at levels that minimize inflation and maximize employment over the past couple of years. and they’ve been remarkably successful, a historically rare feat to pull off. but selecting the optimal interest rate level, which is, in part, based on how fed officials expect the economy to perform in the months and years ahead, has become a lot more complicated since president donald trump took office. that’s because levying tariffs on america’s biggest trading partners, which trump vowed to do, could spur more inflation, some economists have predicted. now, a february 1 deadline is looming for when trump vowed to levy a 25% blanket tariff on mexican and canadian goods and a 10% tariff on all chinese goods. if enacted, this could significantly raise prices us consumers pay for a wide range of goods. that said, many economists believe some of trump’s threats are likely a negotiating tactic, resulting in, for instance, watered down tariffs or perhaps none at all on some countries’ products. still, the wide range of outcomes trump can enact makes it more challenging for fed staff to make economic forecasts that help inform central bankers’ interest rate decisions. the fed’s dilemma over the uncertainty stemming from trump’s second term was noted in a recently published summary of the fed’s december 2024 meeting. “given the elevated uncertainty regarding specifics about the scope and timing of potential changes to trade, immigration, fiscal, and regulatory policies and their potential effects on the economy, the staff highlighted the difficulty of selecting and assessing the importance of such factors for the baseline projection and featured a number of alternative scenarios,” the summary stated. some fed officials are already beginning to make forecasts that take into account tariffs trump may enact so they have more time to react. others are waiting until trump signs new laws into effect. read more here. us stocks were mixed wednesday as investors prepare for the federal reserve’s first rate decision of the year. the dow opened higher and gained around 75 points, 0.17%, in morning trading. the s&p 500 opened lower and was down 0.15%. the nasdaq composite opened lower and slid 0.38%. investors expect the fed to hold interest rates steady after three consecutive decisions to cut rates. economic data shows cooling inflation and low unemployment, meaning the fed can likely pause on cutting rates for a bit. “we do not expect a change in rates, but chair powell will likely use the press conference to set expectations about future rate cuts,” said jeffrey roach, chief economist at lpl financial, in an email. “financial markets will be keen to hear how the trump administration’s policies are changing the fed’s outlook for growth and inflation following the wave of executive orders announced after the inauguration,” said bill adams, chief economist at comerica bank, in a note. the yield on the 10 year treasury note edged lower and the dollar gained wednesday morning. the sentiment driving markets was neutral after being in fear territory for most of january, according to cnn’s fear and greed index. tech giants meta and microsoft are both expected to report earnings this afternoon after the closing bell. tesla is also expected to report earnings after the bell. financial markets finally got a taste of long awaited rate cuts in 2024   but 2025 is already shaping up to be a less than satisfying year. traders are pricing in a 99.5% certainty that the federal reserve will pause on any rate moves this month, holding its benchmark lending rate at a range of 4.25% to 4.50%. after inflation slowed last year, fed officials rolled out three rate cuts in a row, starting in september. but sticky inflation has foiled that plan, putting the central bank back into a holding pattern. now, economists are warning that president donald trump’s tariff threats, mass deportation policies and his focus on boosting domestic oil production could end up further stoking inflation. “inflation remains elevated near 3 percent and has shown little progress toward the 2 percent target in more than a year. uncertainty about prospective policy changes that could be inflationary add another layer of concern,” said bankrate’s chef financial analyst greg mcbride in a note this week. consumers and traders are waiting to learn if the fed’s expected pause today is a one meeting hold or the start of a longer stretch. either way, the focus will be on federal reserve chair jerome powell’s post meeting comments on rates, the trump administration and the central bank’s projections for 2025. at the start of every year, the officials who vote on monetary policy decisions change. that’s because the federal open market committee, the 12 person group of fed officials who vote on where interest rates should be, is structured such that seven people on the fed’s board of governors, which includes chair jerome powell, and the president of the new york fed get a vote every year. the remaining four voters are presidents of one the other 11 regional fed banks, which rotate annually. in effect, this means that one third of the rate setting committee changes each year. and that matters because different fed officials have differing views on where interest rates should be. for instance, at december’s meeting, cleveland fed president beth hammack dissented from the other 11 voters by favoring a rate pause rather than the quarter point cut that occured. however, hammack will now serve as an alternate voter at meetings this year. while richmond fed president tom barkin, atlanta fed president raphael bostic and san francisco fed president mary daly, all of whom voted on interest rate decisions last year, won’t have any opportunity to vote at meetings this year. the new regional fed bank president voters are susan collins from boston, austan goolsbee from chicago, alberto musalem from st. louis and jeffrey schmid from kansas city. all four appear to currently support a rate pause and a gradual approach to any potential cuts moving forward. for instance, goolsbee, who spent much of last year advocating for rate cuts, has more recently indicated the central bank can afford to be more patient with continuing to cut given the strength of the labor market. in remarks from earlier this month, collins said she supports a similar approach, noting that she backed the fed’s decisions to cut rates in november and december. after slashing its key interest rate by a full percentage point last year, the federal reserve on wednesday is expected to kick off a holding pattern that could last throughout the spring. the reason: there hasn’t been much improvement on the inflation front over the past few months as fears over the job market’s health have faded. that means the fed doesn’t have to be in any rush to cut rates   since it seems the us economy is successfully withstanding elevated borrowing costs   allowing central bankers to stand pat as they await for inflation to slow further. in december, fed officials penciled in just two rate cuts for this year, down from the four they projected in september, mostly because of higher than expected inflation readings. for the fed to begin cutting again, officials will have to see inflation continue to drift closer to the central bank’s 2% target. fed policymakers seem to expect that to be the case, according to their recent speeches, but unexpected rough patches have happened. “it just hinges on the data,” fed governor christopher waller told cnbc earlier this month. “if the data doesn’t cooperate, then you’re going to be back to two, maybe even one if we just get a lot of sticky inflation.” every major bank on wall street is in agreement: a cut at this month’s meeting is a no go. but that’s about all they can agree on when it comes to the number of cuts each believes the federal reserve will deliver this year after december’s unexpectedly hot jobs report, which showed us employers hired 256,000 new workers, versus the 153,000 gains economists were expecting. additionally, the unemployment rate fell from 4.2% to 4.1%. at the high end, citibank economists are penciling in a total of five quarter point cuts this year, with the first of those coming as soon as may’s monetary policy meeting. “we still see potential for softer jobs readings in upcoming data,” economists from the bank said in a note to clients after the december jobs report was released earlier in the month. “while the labor market is holding up better than we had expected, price and wage inflation are both cooling and should have officials comfortable cutting even in a still strong economy,” they added. meanwhile, bank of america and bnp paribas economists don’t foresee the fed lowering rates any further this year. labeling the december jobs report as “gangbusters,” bank of america economists said in a note earlier this month that “given a resilient labor market, we now think the fed cutting cycle is over.” president donald trump hasn’t been shy about letting his views on the economy and the federal reserve be known. trump last week falsely claimed he has the ability to control borrowing costs, saying “with oil prices going down, i’ll demand that interest rates drop immediately” in his speech at the world economic forum annual meeting in davos, switzerland. interest rates are broadly determined by market forces, which are influenced in large part by economic trends and the anticipated decisions of central banks. in that same speech, he also mischaracterized the recent bout of inflation that erupted in 2021, claiming that it was a “record” high and that it was solely due to the policies of the biden administration. in june 2022, the closely watched consumer price index reached a 40 year high of 9.1%, well below the all time high of of 23.7% set in 1920, the result of pandemic fueled shocks to demand and supply. cpi rose 2.9% in december from a year earlier. the president also called on foreign oil producers opec and saudi arabia to bring down oil prices, which are influenced by production levels. opec, a foreign cartel that competes directly with the us oil industry, has restrained production in response to weaker demand. later that same day he spoke in davos, trump also doubled down on his criticism of the fed and its current leader, jerome powell. “i think i know interest rates much better than they do, and i think i know it certainly much better than the one who’s primarily in charge of making that decision,” trump said, referencing powell, while speaking with reporters from the oval office. “if i disagree, i will let it be known.” it’s treasury secretary scott bessent’s first week on the job and he has his work cut out for him. as president donald trump’s top economic official, bessent is at the core of the administration’s plans to extend the 2017 tax cuts, renegotiate america’s trade relationship with the world and pare back the federal government’s spending, among other things. the treasury secretary is expected to work closely with federal reserve chair jerome powell. before being nominated by trump to helm the treasury department, bessent floated the idea of the administration naming powell’s successor well in advance of his retirement in mid 2026 to undermine the current fed chief’s influence. bessent never brought up that idea again, instead striking a more neutral tone on the important role that the fed plays, during his confirmation hearing last week. “i think on monetary policy decisions, the (fed) should be independent,” bessent told the senate finance committee. trump, however, hasn’t shared a similar view, saying last week that he expects fed officials to listen to him when determining policy moves and that he will speak with powell directly “at the right time.” most stock quote data provided by bats. us market indices are shown in real time, except for the s&p 500 which is refreshed every two minutes. all times are et. factset: factset research systems inc. all rights reserved. chicago mercantile: certain market data is the property of chicago mercantile exchange inc. and its licensors. all rights reserved. dow jones: the dow jones branded indices are proprietary to and are calculated, distributed and marketed by dji opco, a subsidiary of s&p dow jones indices llc and have been licensed for use to s&p opco, llc and cnn. standard & poor’s and s&p are registered trademarks of standard & poor’s financial services llc and dow jones is a registered trademark of dow jones trademark 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the federal reserve, the central bank of the united states, provides the nation with a safe, flexible, and stable monetary and financial system. federal open market committee monetary policy principles and practice policy implementation reports review of monetary policy strategy, tools, and communications institution supervision reports reporting forms supervision & regulation letters banking applications & legal developments regulatory resources banking & data structure financial stability assessments financial stability coordination & actions reports regulations & statutes payment policies reserve bank payment services & data financial market utilities & infrastructures research, reports, & committees working papers and notes data, models and tools bank assets and liabilities bank structure data business finance dealer financing terms exchange rates and international data financial accounts household finance industrial activity interest rates micro data reference manual (mdrm) money stock and reserve balances other regulations supervision & enforcement community development research & analysis resources for consumers january 29, 2025 for release at 2:00 p.m. est recent indicators suggest that economic activity has continued to expand at a solid pace. the unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. inflation remains somewhat elevated. the committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. the committee judges that the risks to achieving its employment and inflation goals are roughly in balance. the economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate. in support of its goals, the committee decided to maintain the target range for the federal funds rate at 4 1/4 to 4 1/2 percent. in considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks. the committee will continue reducing its holdings of treasury securities and agency debt and agency mortgage‑backed securities. the committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective. in assessing the appropriate stance of monetary policy, the committee will continue to monitor the implications of incoming information for the economic outlook. the committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee's goals. the committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. voting for the monetary policy action were jerome h. powell, chair; john c. williams, vice chair; michael s. barr; michelle w. bowman; susan m. collins; lisa d. cook; austan d. goolsbee; philip n. jefferson; adriana d. kugler; alberto g. musalem; jeffrey r. schmid; and christopher j. waller. for media inquiries, please email [email protected] or call 202 452 2955. implementation note issued january 29, 2025 board of governors of the federal reserve system 20th street and constitution avenue n.w., washington, dc 20551

january 31, 2025 webinar tax strategy, interest rates and your investments. key takeaways at its january 2025 meeting, the federal reserve (fed) held interest rates steady at 4.25% to 4.50%, following rate cuts at three consecutive meetings in 2024’s final months. the fomc now projects just two interest rate cuts in 2025, compared to earlier projections of four rate cuts. the fed noted that risks to its full employment and low inflation goals are roughly in balance. at its january 2025 meeting, the policymaking federal open market committee (fomc) left the federal funds target rate unchanged at 4.25% to 4.50%. this comes after the fomc cut rates in three consecutive meetings at the end of last year by a total of 1.0%. at its previous meeting in december, fomc members laid the groundwork for reduced rate cut expectations. at that time, they trimmed its projected 2025 rate cuts from four to two. it’s important to keep in mind that expectations can change based on economic developments. in a statement after the january meeting, the fed noted that risks to its full employment and low inflation goals are “roughly in balance.” the statement went on to say that the economic outlook is uncertain, and the committee is attentive to risks on both sides of its dual mandate. the fed also justified its position of not making another rate cut at this time by stating, “economic activity has continued to expand at a solid pace (gross domestic product grew at a 3% rate in mid 2024).1 the unemployment rate has stabilized at a low level in recent months (4.1% in december 2024),2 and labor market conditions remain solid. inflation remains somewhat elevated (2.9% in december 2024)2.”3 citing current economic conditions, fed chair jerome powell added, “we do not need to be in a hurry to adjust our policy stance.”4 powell indicated general optimism about the economy’s direction, stating, “we see things as (being) in a really good place for (fed) policy and for the economy.”4 at the same time, he made clear that while there are encouraging signs, the fed is still looking for further inflation progress. “the fed doesn’t want to see negative implications from its interest rate stance,” says rob haworth, senior investment strategist for u.s. bank asset management. “they are likely to remain cautious about further interest rate cuts until they are convinced that inflation for this cycle is subdued.” along with interest rate actions, another fed monetary policy tool is its balance sheet of financial assets. during recent challenging economic periods, the fed tried to boost economic activity by purchasing fixed income assets, such as u.s. government bonds and mortgage backed securities. the fed’s market participation helped moderate interest rates. the balance sheet of assets grew to just under $9 trillion in 2022. since that time, the fed has reduced its balance sheet, now down to less than $7 trillion.5 in its january statement, the fed indicated it continues to reduce its bond holdings.3 haworth is watching whether the fed tapers or ends its balance sheet liquidation strategy. the fed’s reduced bond market participation may be a contributing factor to today’s elevated interest rates. 10 year u.s. treasury yields moved from a low of 3.63% in september 2024, to 4.55% in late january 2025.6 “it seems like there’s some concern in the fixed income markets,” says haworth. “if the fed stops reducing its asset holdings, it could help offset bond market challenges that are helping keep interest rates elevated.” however, january’s fed meeting offered no signs that an adjustment to the fed’s balance sheet strategy is on the table. “the fed doesn’t want to see negative implications from its interest rate stance,” says rob haworth, senior investment strategist for u.s. bank asset management. “they are likely to remain cautious about further interest rate cuts until they are convinced that inflation for this cycle is subdued.” the fed’s primary purpose in raising rates and keeping them elevated was to combat the highest inflation since the early 1980s. at its peak, inflation, as measured by the consumer price index (cpi), reached 9.1% for the 12 months ending in june 2022. the most recent cpi reading, for the 12 months ending in december 2024, showed inflation at a much improved 2.9%, although it has edged higher in recent months.2 “there is a risk of a reacceleration of inflation,” says haworth. “the potential for added tariffs under the new trump administration could add to that risk.” at the same time, says haworth, “the fed doesn’t want to see too much softness in the employment market.” that would contribute to a slowing economy. although the nation’s unemployment rate moved above 4% in mid 2024, it appears to be holding steady.2 haworth notes initial jobless claims provide a helpful “real time” guide on the state of the jobs market. after a brief early december uptick, in early 2025, initial jobless claims again leveled off, an encouraging sign of labor market strength.8 equity markets suffered a significant setback in mid december when the fed announced reduced expectations for 2025 rate cuts. on that day, the s&p 500 fell nearly 3%. the index has recovered most of the ground lost at that point, but investors still appear to have limited rate cut expectations. 10 year treasury yields, a key measure of bond investor expectations, remain elevated given the fed’s current rate stance. the policymaking fomc next meets in mid march 2025. markets are expecting the fed to hold the line on rates at that meeting, with little clarity about when the next potential fed funds rate adjustment may occur.9 as the fed continues to address monetary policy, be sure to consult with your financial professional and review portfolio positioning. explore whether changes might be appropriate given your goals, time horizon and feelings toward risk in today’s evolving interest rate environment. monetary policy is controlled by a nation’s central bank, which in the united states, is the federal reserve (fed). the fed’s management of monetary policy can have a significant impact on the shape of the nation’s economy. congress’ mandate for the fed is to maintain price stability (manage inflation); promote maximum sustainable employment (low unemployment); and provide for moderate, long term interest rates. fed monetary policy influences the cost of many forms of consumer debt such as mortgages, credit cards and automobile loans. the fed is the nation’s central bank, and perhaps the most influential financial institution in the world. the central governing board of the federal reserve reports to congress, with the chair of the federal reserve appointed by the president. there are also 12 regional federal reserve banks that are set up like private corporations. the federal reserve’s federal open market committee (fomc) sets a target interest rate policy for the federal funds rate. this is the rate at which commercial banks borrow and lend excess reserves to other banks on an overnight basis. the fed funds rate is raised or lowered usually to help impact underlying economic conditions. for example, in 2022, as inflation surged, the fomc began raising interest rates to make borrowing more expensive and slow economic activity. that strategy was designed to ease pricing pressures and reduce the inflation rate. in periods when the economy is slow or in a recession, the fed tends to lower rates to try to stimulate economic activity and help the economy expand again. share: as interest rates change, learn what the ripple effects across capital markets may mean for investors. how does an evolving interest rate environment create opportunities for bond investors? source: u.s. bureau of economic analysis. source: u.s. bureau of labor statistics. federal reserve board of governors, “federal reserve issues fomc statement,” jan. 29, 2025. federal reserve board of governors, “chair powell’s press conference,” jan. 29, 2025. board of governors of the federal reserve system (us), asset: total assets: total assets (less eliminations from consolidation), retrieved from fred, federal reserve bank of st. louis. as of january 22, 2025. source: u.s. department of the treasury, daily par yield curve rates. federal reserve board of governors, “summary of economic projections,” released december 18, 2024. u.s. employment and training administration. as of january 25, 2025. cme group, fedwatch, as of january 29, 2025. investment and insurance products and services including annuities are: not a deposit • not fdic insured • may lose value • not bank guaranteed • not insured by any federal government agency. u.s. wealth management   u.s. bank is a marketing logo for u.s. bank. u.s. bank and its representatives do not provide tax or legal advice. your tax and financial situation is unique. you should consult your tax and/or legal advisor for advice and information concerning your particular situation. the information provided represents the opinion of u.s. bank and is not intended to be a forecast of future events or guarantee of future results. it is not intended to provide specific investment advice and should not be construed as an offering of securities or recommendation to invest. not for use as a primary basis of investment decisions. not to be construed to meet the needs of any particular investor. not a representation or solicitation or an offer to sell/buy any security. investors should consult with their investment professional for advice concerning their particular situation. u.s. bank does not offer insurance products but may refer you to an affiliated or third party insurance provider. u.s. bank is not responsible for and does not guarantee the products, services or performance of u.s. bancorp investments, inc. equal housing lender. deposit products are offered by u.s. bank national association. member fdic. mortgage, home equity and credit products are 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copyright 2025 the associated press. all rights reserved. the marriner s. eccles federal reserve board building in washington, nov. 18, 2024. (ap photo/jose luis magana, file) washington (ap)   federal reserve officials at their meeting dec. 17 18 expected to dial back the pace of interest rate cuts this year in the face of persistently elevated inflation and the threat of widespread tariffs and other potential policy changes. minutes from the meeting, released after the typical three week lag, also showed clear division among the fed’s 19 policymakers. some expressed support for keeping the central bank’s key rate unchanged, the minutes said. and a majority of the officials said the decision to cut rates was a close call. ultimately, the fed choose to cut its key rate by a quarter point to about 4.3%. one official, cleveland fed president beth hammack, dissented in favor of keeping rates unchanged. still, there was widespread agreement that after reducing rates for three straight meetings, it was time to undertake a more deliberate approach to their key rate. economists said the minutes strongly suggest that fed officials will forego a rate cut at their next meeting in january. fewer rate cuts will likely mean that borrowing costs for consumers and businesses   including for homes, cars, and credit cards   will remain elevated this year. policymakers said that the fed “was at or near the point at which it would be appropriate to slow the pace of policy easing,” the minutes said. in projections released after the meeting, fed officials said they expect just two cuts next year, down from an earlier projection of four. the minutes also showed that “almost all” fed policymakers see a greater risk than before that inflation could stay higher than they expect, in part because inflation has lingered in several recent readings and because of “the likely effects of potential changes in trade and immigration policy.” the fed’s staff economists considered the economy’s future path particularly uncertain at the december meeting, in part because of the incoming trump administration’s “potential changes to trade, immigration, fiscal, and regulatory policies,” which the staff said are difficult to assess in terms of how they will impact the economy. as a result they included several different scenarios for the economy’s future path in their presentation to policymakers. and the staff projected that inflation this year would be about the same as in 2024 because they expected trump’s proposed tariffs would keep inflation elevated. fed officials sent stock markets plummeting dec. 18 after they reduced their outlook for rate cuts. fed chair jerome powell said at a news conference after the meeting that the decision to reduce rates had been a “close call.” powell also said that recent signs of stubborn inflation have caused many fed officials to pare back their expectations for rate cuts. inflation, according to the fed’s preferred measure, ticked up to 2.4% in november, compared with a year ago, above the fed’s target. excluding the volatile food and energy categories, it was 2.8%. in addition, some officials have started to consider the potential impact of president elect trump’s proposals, such as widespread tariffs, on the economy and inflation next year, the minutes said. economists at goldman sachs, for example, have estimated that trump’s tariff proposals could push inflation up by nearly a half percentage point later this year. earlier wednesday, fed governor christopher waller said that he still supported rate reductions this year, in part because he expects inflation to steadily head down to the fed’s 2% target. he also said he didn’t expect tariffs would worsen inflation and wouldn’t change his preference for lowering borrowing costs. waller also said, in a question and answer session, that he didn’t think trump would ultimately impose the universal tariffs he promised in the campaign. copyright 2025 the associated press. all rights reserved.

• the federal reserve cut its benchmark lending rate again thursday, the second time this year as inflation continues to slow. • the quarter point move comes as the us economy faces a new direction and a new president. • voters in the us presidential election frequently noted that the economy, and especially higher price levels, were a deciding factor in their decision making. • fed chair jerome powell took questions at his post meeting press conference, where the discussion largely centered on what president elect donald trump’s return to the white house means for the central bank, inflation, rate moves and the fed’s independence. steven mnuchin, who served as treasury secretary for all four years of president elect donald trump’s first term, said that trump would be “very careful” not to reignite inflation with tariffs. on the campaign trail, trump said he planned to impose an across the board tariff of either 10% or 20% on every import coming to the us and a tariff of upward of 60% on chinese imports. economists have warned that tariffs, a tax on imports, would result in higher prices on everyday products for consumers. but on cnn’s the lead with jake tapper on thursday, mnuchin said that trump was focused on inflation. “i think president trump clearly understands the impact of inflation, and i think he’s going to be very careful,” mnuchin said of trump’s tariff plans. mnuchin also said that in trump’s first term, tariff exceptions were granted “on things that were going to have an impact on us companies.” “but we did it very strategically,” mnuchin added. mnuchin said that trump’s priority upon returning to office will be to extend the 2017 tax cuts and jobs act. parts of trump’s signature tax cut legislation expire in 2025. “i think he’ll add in some additional cuts that will be pro growth,” mnuchin said. all three major indexes ended the day higher on thursday, extending their post election rally. but it wasn’t due to any massive moves: the dow ended the day with a gain of just 0.2%, or 74 points   a dramatic difference to wednesday’s surge of around 1,500 points. the s&p closed 0.8% higher, marking its 49th record high of the year; and the nasdaq composite moved up by 1.5%. three plus years of high inflation have weighed heavily on americans, their finances and their outlooks on the economy. and while that global inflation shock has certainly waned, and the rate of price hikes is close to normal, it hasn’t felt great to americans, because those price levels aren’t going back down to where they were before. so when will people start to feel relief? “it takes some years of real wage gains for people to feel better,” chair jerome powell said thursday. “that’s what we’re trying to create. and i think we’re well on the road to creating that.” average hourly earnings gains have outpaced inflation for 17 months as of september, according to bureau of labor statistics data. inflation has come down, the economy’s still strong and wages are moving up at a sustainable pace. “but it will be some time before people regain their confidence and feel that,” he said.“and we don’t tell people how to feel about the economy. we respect, completely respect what they’re feeling. those feelings are true; they’re accurate. we don’t question them, we respect them.” when asked if the fed would consider undershooting on its 2% target to help people catch back up, powell said that’s not in the cards. “that’s not the way our framework works,” he said. “we do not think it would be appropriate to deliberately undershoot … low inflation can be a problem too.” after issuing a terse “no” in response to a question about whether he would leave his post at the federal reserve before his term is up if president elect donald trump asked him to leave, fed chair jerome powell later clarified that he believes trump cannot fire him. ”not permitted under the law,” powell said. however, the question may be moot. although trump has publicly quarreled with powell in the past, trump remains likely to allow the fed chair to serve out the remainder of his term, which expires in may 2026, according to a senior adviser to trump who requested anonymity to describe private conversations. trump at times during his first term took the unusual step of publicly griping about the fed’s policy. but powell wouldn’t comment on thursday on questions about whether he was concerned trump in his second term could go further to undermine the fed’s independence. “i’m not going to get into any of the political things here today. but thank you,” powell said, politely. the recent batch of economic data has federal reserve officials “feeling good” about economic activity, but chair jerome powell isn’t close to taking a victory lap. inflation has cooled substantially from its highs of two years ago, and pressures behind the price hikes are largely reflective of “catch up” issues: leases turning over, catching up to market rate rents; insurance renewals catching up to higher prices; and auto related costs. plus, the cooling labor market is not a source of inflation, he added. but, he noted: “the job’s not done on inflation.” “so we’re not declaring victory, but we feel like the story is very consistent within inflation continuing to come down on a bumpy path over the next couple of years and settling around 2%,” he said. “that story is intact.” however, he cautioned that risks are still present and reiterated the importance of the fed finding the right pace for loosening monetary policy. if the fed moves too quickly, there are risks inflation could reaccelerate. if it moves too slow, there are risks of the labor market weakening significantly, he said. the major indexes moved slightly higher thursday afternoon after the federal reserve said it would be cutting rates by a quarter point. the dow gained 0.1%, the s&p 500 moved up by 0.8% and the nasdaq composite was up 1.5% as fed chair jerome powell gave his post meeting press conference. treasury yields fell thursday, after surging wednesday when the presidential election was decided. would federal reserve chair jerome powell resign if asked to do so by president elect donald trump, with whom he clashed several times during his first term? “no,” powell said, without hesitation, in response to a reporter’s question at thursday’s post meeting press conference. trump has previously asserted he has the right to fire powell, but powell staunchly disagrees. “not permitted under the law,” powell said thursday. that’s because once fed officials are confirmed, they’re only able to be removed from the position if they are found to have violated the law. the next four years under president elect donald trump are poised to look vastly different than the last couple of years under president joe biden. for instance, a trump administration could come with sweeping tariffs, mass deportations of immigrants and more tax cuts. these policies, and others he campaigned on, could significantly alter the economic outlook to the extent that continuing to cut rates may no longer be optimal. for now, “the election will have no effects on our policy decisions,” fed chair jerome powell told reporters on thursday. “we don’t know what the timing and substance of any policy changes will be. we therefore don’t know what the effects on the economy would be.” that’s why powell said that “there’s nothing to model right now” in terms of how trump’s policies could impact the economy. once officials have more clarity on whether his proposals will go into effect they’ll update their models, he said. the elephant in the room at the fed today is president elect donald trump, and what his economic proposals mean for the economy. by most accounts, trump’s blanket tariff proposals and aggressive tax cuts translate to more inflation just as the fed is taking its victory lap. that could ultimately spell the end of the central bank’s rate cutting, at least for a while. “what we’ve seen is possibly the last rate cut, as tariffs and government bring back the looming risk of inflation,” giuseppe sette, president of reflexivity, wrote thursday. notably, the fed dropped the phrase “gained greater confidence” in its description of inflation moving toward the bank’s 2% target, said ryan sweet, chief us economist at oxford economics. “this tweak to the statement is likely a subtle acknowledgment of the heightened uncertainty in the outlook because of the election, without explicitly saying it,” sweet said in note. to be clear, fed chair jerome powell is not saying anything about the last rate cut. “as a general matter, as we move ahead, we are prepared to adjust our assessments of the appropriate pace and destination as the outlook evolves,” the fed head said at his press conference thursday. as the fed cuts rates, you’d think mortgage rates would fall, too. but, nope: mortgage rates fell in anticipation of the fed cutting rates, but they’ve been creeping higher for six straight weeks, and a 30 year mortgage will now land you a rate of nearly 6.8%. that’s because us treasury bonds keep falling. consumer loan rates like mortgages are more closely tied to the 10 year us treasury yield, which has been steadily rising as bond prices sink. and yields have been rising as the us economy outperforms the rest of the world, making america’s debt more attractive, and they’ve risen in anticipation of president elect donald trump’s reelection, because he has proposed economic policies that could send inflation higher. the fed has said the housing market remains stuck and is source of persistent inflation. so why not cut rates even more to try to influence bond yields lower? fed chair jerome powell said thursday that the fed isn’t convinced the bond market will remain weak for long. he said it may be a momentary blip because of policy decisions outside the fed’s control. “we do take financial conditions into account. if they’re persistent and if they’re material, then we’ll certainly take them into account in our policy. but i would say we’re not at that stage right now,” powell said. if federal reserve officials stick to the forecasts they submitted at september’s monetary policy meeting, we could see one more quarter point cut at next month’s meeting and another four quarter point cuts in 2025. their forecasts are subject to change, based on how the economy evolves. for instance, if officials become more worried about inflation heating up, they may opt to hold off on cutting rates further. already, traders anticipate there will be closer to two cuts next year, according to fed funds futures. that may be a reflection of traders’ belief that president elect donald trump’s policies, which could include sweeping tariffs, may reignite inflation. “every meeting we’re going to be looking at the incoming data and how that affects the outlook,” fed chair jerome powell told reporters in a post meeting press conference thursday. he declined to comment on whether officials’ forecasts have changed since the september meeting. at every other monetary policy meeting, federal reserve officials are required to submit forecasts on the economic outlook for the remainder of the current year as well as for the subsequent three years and longer run. their forecasts are included in the summary of economic projections, which colloquially is referred to as the “dot plot,” signifying each official’s views displayed simply as a dot. officials last submitted projections at september’s meeting. here’s how they believe the economy will evolve, based on the median forecast: federal reserve officials’ decision to cut interest rates by a quarter point was unanimous, unlike september’s meeting where fed governor michelle bowman went against the tide, voting for a quarter point cut versus the half point cut all 11 other officials voted for. that marked the first time in over two years a fed official dissented from the majority decision. bowman later explained she favored the smaller cut at september’s meeting because she was concerned the larger cut could “unnecessarily” stoke demand, potentially ushering in more inflation, she said in a statement. economic figures show the federal reserve currently has to watch both inflation and the job market. officials stated in their latest policy statement thursday that the risk of the job market deteriorating and the risk of inflation reaccelerating are roughly the same magnitude now. but in recent months, attention has shifted more toward the health of america’s labor market, which remains in decent shape, but has clearly lost momentum over the past year. employers had a seasonally adjusted 7.4 million job openings in september, according to labor department data, down considerably from 9.3 million in the same month a year earlier, while the rate of hiring fell to 3.5% from 3.7% during the same period. the unemployment rate stood at 4.1% in october, up from 3.8% a year earlier (though still at a historically low level.) worker filings for ongoing unemployment benefits rose last week to the highest level since november 2021, an indication that it has become harder for unemployed americans to find a job. fed officials wrote in their statement that “since earlier in the year, labor market conditions have generally eased.” overall, the november statement from the federal reserve included a “subtle shift in tone” that suggests the fed “may have lost some confidence in the disinflationary path,” wrote seema shah, chief global strategist at principal asset management, in a note issued after the fed decision. that’s “a dynamic that the us election result is likely to exacerbate,” she wrote. the federal reserve cut interest rates by a quarter point thursday on the heels of the us presidential election earlier this week. it’s the second rate cut since the central bank began to lower borrowing costs in september, though the latest cut is smaller. still, it provides americans further relief from the high cost of loans like credit cards and autos. slower inflation and a cooling job market paved the way for thursday’s decision. federal reserve officials likely aren’t going to say how they think president elect donald trump’s second term will impact the economy. in fact, the fed prides itself on avoiding even the suggestion that it is wading into politics. at the same time, the policies elected officials enact undeniably have an impact on the economy, and as fed officials cast votes on where they believe interest rates should be to fulfill their mandate for stable prices and maximum employment, they have to consider the effect of fiscal policy. as such, at the fed’s monetary policy meeting that took place after trump was elected for his first term, officials asked fed researchers who advise central bankers to spell out how they believe policies trump campaigned, such as tax cuts and tariffs, could impact the economy. that’s according to a transcript of the december 2016 monetary policy meeting. some researchers told officials they were already starting to incorporate the potential effects of trump’s campaign initiatives into their economic models. at that meeting, some officials even expressed concerns with trump’s agenda, according to the december 2016 meeting transcript. (transcripts are made available to the public at a roughly five year lag.) loretta mester, then president of the cleveland fed, said: “policies that constrain immigration and trade would have negative effects for the us economy over the medium and longer run, but i have not incorporated these into my projections at this point. read more here. president elect donald trump felt vindicated by the decisive election victory that cemented his return to power. but he felt downright ecstatic by the fact that the stock market notched new record highs after the outcome, according to two sources who have spoken with trump. “i know that he was euphoric over that,” said one of these sources. “it’s kind of like a stock market referendum on the trump agenda, right?” the massive rally kicked off before the market opened wednesday and continued through the morning and afternoon trading sessions. the dow closed at a new record high after its best day since 2022. the s&p 500 and nasdaq also reached new highs, with the s&p surging by 2.5% and the tech heavy index closing 2.95% higher. the us dollar had its best day in two years and treasury yields also rose. the rally, though, may not be a reflection of investors’ celebrating trump’s victory, but rather that the election was decided relatively quickly. the election   and the widely held belief that trump and his allies could contest the result in courts   has served as a cloud over the us economy and stock market in recent months. during his last term, trump often mused that the stock market was a more telling bellwether of his performance in office than voters’ approval ratings in official polls. he frequently sought to jawbone the market   by teasing investor friendly trade deals, tax cuts and personnel moves   especially during critical political periods, like the run up to midterms and his 2020 reelection. when his cabinet officials appeared on television to talk up his policies, they frequently did so with the goal of moving the market to make the boss happy. this time around, investors have harbored reservations about trump’s pursuit of steep tariffs, which could impact growth and inflation. they’ve also worried about the impact of higher taxes on corporations and individuals that vice president kamala harris had proposed. the market reaction, trump believes, was a sigh of relief she didn’t win. and long sought vindication for him. inflation is likely to rise in the united states and around the world if newly elected us president donald trump follows through on his campaign promises to cut taxes, crack down on immigration and hike tariffs on all imported goods. together with a republican majority in the us senate, trump’s reelection puts the former president in a strong position to implement his potentially radical economic agenda. trump’s proposed economic policies   including deporting immigrants, across the board tariffs and increased political influence on the fed   would, if fully implemented, “likely lead to a substantial decrease” in us economic output and “a large increase in inflation,” said antonio fatás, an economics professor at insead business school headquartered in france. susannah streeter, head of money and markets at investment platform hargreaves lansdown, echoed some of these views. a stronger dollar reflects expectations that trump will cut taxes, hike tariffs and clamp down on immigration, which are all inflationary and likely to mean more elevated interest rates in the years to come, she wrote in a note wednesday. “investors are bracing for tariffs… which will push up the price of imported goods for american shoppers,” she added. trump’s “vow to kick out immigrants with waves of deportations could also have economic ramifications, potentially pushing up wage bills for companies.” read more here. fed officials stress that their decisions are dependent on economic data, firm indications of the economy’s health and possible direction. but there’s one key concept guiding the fed that chair jerome powell says is “theoretical” and “can’t be directly observed.” that’s the so called “neutral rate of interest,” a level of interest rates that neither stimulates nor dampens the economy. the fed’s main tool is its key interest rate, which influences borrowing costs across the economy, and it functions by either boosting demand, if rates are low, or by cooling it, if rates are elevated. that depends on whether the fed is dealing with high inflation, which prompts the fed to slow the economy, or high unemployment, which forces the fed to do the opposite. economists describe the neutral rate of interest as theoretical because it depends on many, many factors that render it too imprecise   such as population growth, productivity, savings behavior, any structural changes in the economy and so on, in addition to the effects of borrowing costs. with inflation down substantially from a four decade peak reached in 2022, and just a whisper away from the fed’s 2% goal, the fed has shifted more attention to america’s job market, which has steadily weakened over the past few years. it remains in good shape, but powell telegraphed in september that the fed is committed to maintaining its strength, avoiding any deterioration. fed officials have said they think borrowing costs are still at restrictively high levels, which puts the labor market at risk. now it’s a matter of how fast the fed wants interest rates to go back to that neutral rate of interest. that, of course, also depends on inflation. some officials have said they feel no urgency to pare back rates. “i’m not in a rush to get to neutral,” atlanta fed president raphael bostic said last month at an event in jackson, mississippi. “we must get inflation back to our 2% target, and i don’t want us to get to a place where inflation stalls out because we haven’t been restrictive for long enough. so i’m going to be patient.” federal reserve chair jerome powell will undoubtedly never say it, but it’s got to be a lingering concern on his mind and on that of other fed officials at this week’s monetary policy meeting: will president elect donald trump’s return to the white house destroy the soft landing? a soft landing describes the rare scenario where inflation subsides without a substantial rise in the unemployment rate. thus far, that’s largely been avoided. the fed’s preferred inflation gauge is just one tenth of a percentage point above its 2% target, a remarkable pivot from june 2022, when it was at a 40 year high of 7.2%. during that time, the nation’s unemployment rate rose only slightly from 3.6% in june 2022 to 4.1% in october of this year. when the fed began raising interest rates to tame inflation in march 2022, few economists thought the central bank could pull that off absent a recession. but the us economy has continued to chug along, albeit with some bumps. but the sweeping tariffs trump promises to impose on all imports could cause inflation to spike again, causing the fed to recalibrate its policy stance, which could involve potentially raising interest rates again. but that could lead to more people becoming unemployed. after reaching record highs wednesday, the major indexes mostly paused for reflection on thursday ahead of the federal reserve’s announcement on interest rates. the dow was flat going into afternoon trading, the s&p 500 was just 0.6% higher and the nasdaq composite gained 1.2%. market participants are widely expecting the central bank will announce a quarter point rate cut at 2 pm et as data continues to show that inflation, which reached a four decade peak in 2022, is now just short of the fed’s target rate of 2%. last week, the labor department reported us employers hired just 12,000 workers last month, far lower than the over 100,000 job gain economists expected. the inability to gather data after the back to back deadly east coast hurricanes, coupled with the ongoing boeing labor strike, were partially responsible for that lower number. that’s why many economists see the drop in hiring from september, when employers added a revised 223,000 jobs, as a temporary blip and not indicative of a labor market in peril. as such, federal reserve officials tasked with deciding where interest rates should be to fulfill their dual mandate for maximum employment and stable prices are unlikely to change their course of action based on the october jobs report. because it’s impossible to tease out with certainty just how much of last month’s weak hiring came from the hurricanes and strike, officials are probably going to turn more of their attention to the unemployment rate, which is generated by a different survey that considers weather affected employed. last month it held steady at 4.1%, which is two tenths of a percentage point lower than where it was in july. and while it’s good that the unemployment rate has edged lower, fed officials are likely looking for more evidence that the labor market is in better shape before it leaves rates unchanged at a meeting. president elect donald trump is likely to allow federal reserve chair jerome powell to serve out the remainder of his term, which expires in may 2026, according to a senior adviser to trump who requested anonymity to describe private conversations. the adviser cautioned that trump could always change his mind, but his present view   and that of trump’s economic team   is that powell should remain atop the central bank as it pursues its policy of cutting interest rates. trump appointed powell, a republican former private equity executive who served on the central bank’s governing board, to its top spot in 2018. president joe biden reappointed him to a second four year term. gary cohn, the goldman sachs alum who served as economic policy director during trump’s first administration, is said to want the job, but former trump officials have said the fact that cohn resigned in protest over trump’s steel tariffs makes it highly unlikely he’d get it. among the names mentioned by sources in touch with the trump transition are kevin warsh, who served for five years on the bank’s board of governors and advised trump during his first term; as well as trump’s former chief economist kevin hassett. in july, before trump was elected, the fed chair was asked whether he intended to serve out the remainder of his term, and he said, unequivocally, “yes.” read more here. borrowing money to buy a home in the us has become more expensive for each of the past six weeks, even as the federal reserve is expected to announce another interest rate cut later thursday. the average on a standard, 30 year fixed mortgage was 6.79% in the week ending november 7, according to data released by freddie mac on thursday. the recent climb in mortgage rates may be unwelcome news for prospective homebuyers who may have anticipated that a rate cut from the federal reserve would result in a drop in home borrowing costs. mortgage rates had drifted lower over the summer, eventually reaching a two year low of 6.08% in late september after the fed slashed its benchmark interest rate for the first time in four years. but mortgage rates track the 10 year us treasury yield, which has steadily risen in recent weeks on the back of strong economic data. the 10 year treasury yield leaped even higher on wednesday after donald trump won the us presidential election against vice president kamala harris. during his first term, now president elect donald trump frequently lambasted the federal reserve and its leader jerome powell for not cutting rates. a wall street journal report earlier this year showed that trump allies have drafted up a proposal that aims to erode the fed’s independence, a feature of the institution that’s highly regarded by economists and investors. this plan reportedly includes “subjecting fed regulations to white house review and more forcefully using the treasury department as a check on the central bank,” in addition to installing a trump loyalist to replace powell, once his term ends in 2026. but that won’t be easy. first, such changes would need to be approved by congress to amend the “federal reserve act,” the 1913 law that established the fed in all its glory. and even though republicans have taken control of the senate, and seem to be on track to clinch the house, there’s little indication that there’s appetite among republicans to give the fed a makeover. if trump indeed appoints a loyalist to replace powell, that person would have a hard time convincing other fed officials to go along with their decisions, if they’re not backed by data and are just aimed at pleasing trump. “even if the chair wanted to adjust monetary policy in light of short term political considerations, they probably wouldn’t be able to do that, or at least not much, because the [fed] wouldn’t go along,” william english, a former senior fed adviser, told cnn. “the [fed] would do what it thinks is the right thing to do.” for over 70 years, the us central bank has operated as an independent government agency. when officials meet to decide where interest rates should be, they don’t consult the president and other elected officials   and for good reason. that’s because, as one former federal reserve chair famously said, central bankers’ job is to remove the punchbowl right when the party is just getting started. said differently, they have to make unpopular decisions that ultimately seek to benefit the economy in the long run. but the fed’s independence could be compromised once president elect donald trump returns to the white house. “i feel the president should have at least a say in there. i feel that strongly,” trump said at a press conference in august, referring to the fed’s interest rate decisions. “i made a lot of money. i was very successful. and i think i have a better instinct than, in many cases, people that would be on the federal reserve   or the chairman.” it’s unclear if trump, or any president, could take the fed’s independence away on his own or if it would require congressional approval. representatives from the trump campaign did not respond to cnn’s request for a comment, while a fed spokesperson declined to comment. after a barrage of backlash, trump sought to soften his prior comments. “a president certainly can be talking about interest rates because i think i have very good instincts,” trump said in a bloomberg news interview less than two weeks after he claimed he deserved a say. “that doesn’t mean i’m calling the shot, but it does mean that i should have a right to be able to talk about it like anybody else.” read more here. us stocks opened with a small gain thursday ahead of a key policy announcement from the federal reserve. the dow rose by just 0.07%, the s&p rose by 0.4% and the nasdaq composite gained 0.7%. thursday’s moves come after a monster rally wednesday, prompted by president elect donald trump’s return to the white house. first time claims for jobless benefits ticked higher as expected last week but remained steady with what’s been seen over the past year; however, americans are staying unemployed for longer, according to new data released thursday. there were 221,000 initial claims for unemployment insurance made during the week ended november 2, the department of labor reported thursday. those filings are up by 3,000 from the upwardly revised tally the week before. the initial claims   considered a proxy for layoffs   hit economists’ expectations on the nose, according to factset estimates. while the first time claims settled down as anticipated after a brief stint of being pushed upward by hurricane affected workers, the number of continuing claims, which are filed by people who have received unemployment insurance for at least a week or more, moved higher by 39,000 to 1.892 million for the week ended october 26. that’s the highest level of continuing claims since november 2021. the us jobs market has been cooling. the pullback in job growth has been attributed more to employers reining in hiring versus conducting layoffs. federal reserve officials are dealing with something of an economic puzzle as they deliberate their latest decision on interest rates. there are signs of a robust economy, such as american shoppers continuing to spend their dollars at a healthy clip and consumer confidence jumping in october at the fastest pace in more than three years. in addition to strong consumer spending   which accounts for about two thirds of the us economy   businesses have also continued to invest, according to recent government data. but there are also signs of slowing momentum: job openings, a proxy for labor demand, fell in september back to pre pandemic levels. the october jobs report was difficult to assess because of the effects of recent hurricanes and labor strikes on data, but it still came in far below expectations that factored in those disruptions. and on the inflation front, price pressures have continued to ease in recent months, though not quite as much as economists expected. it’s unclear if inflation might stall out or finally reach the fed’s 2% target, which is only a hair away, according to the personal consumption expenditures price index, aka the fed’s favorite gauge of inflation. to promote his economic platform of broad brush tariffs and tax cuts, president elect donald trump is expected to lean on longtime allies and loyalists, while tapping into wall street heavyweights to round out his domestic agencies. there are several names being batted around for treasury secretary. they include scott bessent, who prepared trump for his economic club speeches. “he’s a former soros guy who captured the maga movement. the president loves that, former democrats that he’s flipped. that’s why he loves elon [musk] so much,” said a source familiar with the matter. john paulson, a hedge fund billionaire and megadonor, is also under consideration. jay clayton, a former chair of the securities and exchange commission, is seen as a “dark horse,” according to one source. lighthizer has also expressed interest in the treasury post. both bob lighthizer, trump’s former us trade representative, and linda mcmahon are also under consideration to run the commerce department. north dakota gov. doug burgum, who was a finalist to be trump’s vice presidential pick, is being floated as interior secretary. at the office of the us trade representative   a once sleepy outfit across the street from the white house   the trump team is looking for someone who wouldn’t flinch at his often mercurial whims on tariff policy. jamieson greer, who served as lighthizer’s deputy when trump instituted across the board tariffs on adversaries and allies alike, is the name sources raise most often for this role. read more here. stock futures were higher in the us ahead of the federal reserve rate decision, set to be released at 2 pm et. futures on the dow and s&p were up around 0.2% and nasdaq futures gained by 0.3%. markets had rocketed higher wednesday following president donald trump’s decisive and consequential victory in the us presidential election. the massive rally pushed up the dow by 1,507 points, or 3.57%, to close at a new record high. it’s the first time the blue chip index has gained more than 1,000 points in a single day since november 2022. the s&p 500 and nasdaq also reached new highs the morning trump became president elect, with the s&p surging by 2.5% and the tech heavy index closing 2.95% higher. the us dollar had its best day in two years, bitcoin topped $76,000 and treasury yields also rose. the bank of england cut interest rates by a quarter point thursday, after inflation in the united kingdom fell to a three year low in september. the decision takes the uk’s benchmark interest rate to 4.75% from 5%, where it had stood since august, after the first rate cut since the start of the pandemic. “the disinflationary process has progressed well and indeed faster than we expected,” bank of england governor andrew bailey told reporters. “both oil and gas prices have been significantly lower than market pricing suggested a year ago, but the downside news to inflation over the year has also reflected lower than expected food, core goods and services price inflation,” he added. uk inflation slowed to 1.7% in september, from 2.2% in august, falling below the bank of england’s 2% target to its lowest level since april 2021. bailey cautioned, however, that interest rates would need to “remain restrictive for sufficiently long” until risks to inflation, including strong wage growth and the price of some services, have “dissipated further.” “we need to ensure inflation stays low. so we will not cut rates too quickly or too much,” the bank of england said. the federal reserve is expected to announce thursday it is cutting interest rates, a decision that comes just two days after a divisive and historic us presidential election. the central bank is widely expected to cut rates by a quarter point at the conclusion of its two day policy meeting. the widely expected move comes as inflation remains on a downward trend. investors will be listening closely thursday afternoon to comments from fed chair jerome powell at his traditional post meeting press conference for any clues on the pace of future rate cuts, given the policies touted by former president donald trump, who is poised to return to the white house for a second term. the federal reserve has eight scheduled two day monetary policy meetings every year. one of those meetings takes place in november and, coincidentally, kicked off the wednesday directly right after election day. as fed chair jerome powell has previously vowed, officials don’t take the political calendar into consideration when they make interest rate decisions. rather, it’s always about doing what’s best for the economy, powell’s said. still, this meeting’s proximity to election day has put the fed in an uncomfortable position   whether powell and his colleagues want to admit it or not. already, officials have been scrutinized for their decision to begin lowering rates at its last meeting before the election, which took place in september. the concern has been that the fed could have inadvertently helped out democrats by lowering borrowing costs for americans, potentially leaving some feeling better about the state of the economy as they prepared to cast votes. but even though this month’s meeting comes after the election, it could still appear as though central bankers are giving an assist to one political party over another. for instance, if the fed scales down the size of its rate cut   or doesn’t cut rates at all   it could, once again, give some people the impression that officials wanted to improve the election outcome for democrats by getting in a larger than usual cut at the september meeting instead of waiting to do so at this month’s meeting. most stock quote data 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adam hayes, ph.d., cfa, is a financial writer with 15+ years wall street experience as a derivatives trader. besides his extensive derivative trading expertise, adam is an expert in economics and behavioral finance. adam received his master's in economics from the new school for social research and his ph.d. from the university of wisconsin madison in sociology. he is a cfa charterholder as well as holding finra series 7, 55 & 63 licenses. he currently researches and teaches economic sociology and the social studies of finance at the hebrew university in jerusalem. win mcnamee / staff / getty images the next federal open market committee (fomc) is on september 17 18, 2024. this is one of the key dates that investors, economists, and policymakers mark on their calendars. the fed is widely expected to cut its benchmark fed funds rate for the first time in more than four years at the september meeting. fed officials have signaled that rate cuts are coming as inflation has moderated and the labor market has cooled, though they haven't commented on the pace or depth of the easing. there is significant debate among market participants and economists about whether the fed will cut the rate by 25 and 50 basis points in september. the rate has been in range of 5.25% 5.50%, the highest level since 2001, for more than a year. the fomc is the federal reserve system's monetary policy making arm, and its decisions have far reaching implications for the u.s. economy. meeting eight times a year, and occasionally more if the situation demands, the fomc deliberates on the nation's interest rates and other financial policies. these decisions influence everything from the rates you get on your savings account to the cost of borrowing for homes and businesses. so, when the fomc speaks, people listen. during the most recent fomc meeting held on july 30 31, 2024, interest rates were kept unchanged at 5.25% 5.50%. this was expected, as it gave the fed additional time to evaluate if the current rates keep inflation at bay without hampering economic growth too much. in its statement after the meeting, the fomc said: "the committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent." during the 2022 2023 tightening cycle, the fed increased rates 11 times to slow inflation. the central bank has held rates steady at 5.25% 5.50% since july 2023 as inflation has moved lower, albeit slowly, toward the fed's annual target of 2%. the federal open market committee (fomc) is the monetary policy making body of the federal reserve system, the central bank of the united states. the fomc holds eight regularly scheduled meetings during the year and may hold other meetings as needed to set emergency short term interest rates or implement other policy tools. the fomc consists of 12 members: the seven members of the board of governors of the federal reserve system, the president of the federal reserve bank of new york, and four of the remaining 11 reserve bank presidents, who serve one year terms on a rotating basis. at each fomc meeting, the members review economic and financial conditions, determine the appropriate stance of monetary policy, and assess the risks to its long term goals of price stability and sustainable economic growth. the fomc issues a statement after each meeting summarizing its assessment of the economy and policy decisions. the statement also includes an implementation note providing operational details on how the policy decision will be carried out. the fomc also publishes its summary of economic projections (sep) four times a year, showing the members’ forecasts for key economic variables over the next three years and their views on the appropriate path of the federal funds rate. the fomc meetings are closed to the public but are recorded and transcribed. the minutes of each meeting are released three weeks after the date of the policy decision. the transcripts are released with a five year lag. the fomc chair typically holds a press conference after four of the eight meetings each year, where the chair explains the policy decision and answers questions from journalists. federal reserve chair jerome powell and other officials have made clear that the central bank is prepared to start cutting interest rates. while inflation is still slightly above the fed's 2% target, fed officials have said that they don't need to wait until it's hit the target before easing policy. policymakers have also increasingly expressed concern about a weakening in the labor market. the fed aims to achieve a soft landing for the u.s. economy while balancing its dual mandate of maximum employment and price stability. the fed’s decision and statement will have important implications for investors, as they affect the cost of borrowing, the value of markets and assets, and the direction of the u.s. dollar. heading into the september meeting, investors and economists are certain that the fomc will decide to cut the fed funds rate, but there is little agreement on whether officials will cut the rate by a quarter percentage point or half a percentage point. the lack of market consensus heading into a fed meeting is unusual. since the fed normally doesn't adjust rates by more than a quarter point, some analysts say that a half point cut could needlessly send the signal that the fed sees the possibility of a significant deterioration of the economy. others say that a large cut is warranted, arguing the fed has waited too long to begin easing policy. in addition to the decision on rates, the fomc will release its quarterly economic projections, which include forecasts from committee members on where the fed funds rate will be in the future. those projections will be closely scrutinized by investors and economists, as will the fomc statement and chair powell's comments at the post meeting press conference, for signals on what the fed might do in subsequent meetings. during the latest fomc meeting decision, released on july 31, the fed again held the fed funds rate steady at 5.25 5.50%, continuing a pause from an aggressive rate hiking campaign that began in march 2022 to fight rising inflation. the fed also signaled that it was willing to keep rates steady until inflation moderated toward its 2% target. while inflation had moderated somewhat, the fed indicated that it would continue to proceed carefully as it monitored the economy and continued to unwind its balance sheet to reduce its holdings of treasuries, agency debt, and mortgage backed securities (mbs). the market widely expected the fed’s decision to hold rates steady following a series of rate hikes that culminated in july 2023. the fed had raised rates 11 times since early 2022 '23 to cool economic activity and tame inflation rates that peaked at more than 9% last year. the fed’s rate hiking campaign has been the most aggressive since the 1980s, and it sparked some turmoil in the banking sector, the stock market, and the global economy. however, rates at around 5.50% are still less than half of their 1980s peak. the fed reported after its july meeting that the american economy remains strong and the labor market resilient  but also acknowledged that the pace of growth had slowed down compared to 2023. as usual, the fed reaffirmed its commitment to achieving its dual mandate of maximum employment and price stability and said that it would act as appropriate to sustain the expansion. the fed’s policy moves would depend on what economic indicators, including the consumer price index (cpi), payrolls, and gross domestic product (gdp) growth, showed. the fed’s decisions and statements have important implications for investors, as they affect the cost of borrowing, the value of assets, and the strength of the u.s. dollar. investors and analysts pay close attention to the fed’s announcements and actions, as those can have a significant impact on market conditions, which affect their portfolios, strategies, and recommendations. the fomc regularly meets eight times a year. the table below shows the calendar from december 2022 thru 2024, and how the fed decided on interest rate hikes. no, the fed once again held interest rates steady at 5.25% 5.50% during its july, 2024 fomc meeting. rates have been steady at this level for a year, since july 2023. there were four rate increases in 2023, occurring at the february, march, may, and july fomc meetings. fed chair powell has said that "the time has come for policy to adjust," indicating that rate cuts are on the horizon. fed officials have not commented on the pace or depth of possible rate cuts, but have acknowledged progress in controlling inflation and concern about a weakening in the labor market. investors and economists expect that the fed will make multiple cuts to the fed funds rate before the end of the year. the next fomc meeting will be held in september 2024. the fed has held rates steady for more than a year at 5.25% 5.50%, the highest level since 2001. experts predict that the fed will soon shift to rate cuts, although the extent to which they do will depend on economic conditions in the coming months. board of governors of the federal reserve system. “federal open market committee: meeting calendars, statements, and minutes (2018 2024).” cme group. “cme fedwatch tool.” board of governors of the federal reserve. "federal reserve issues fomc statement (july 2024)." new york times. "federal reserve meeting: fed leaves rates unchanged." board of governors of the federal reserve system. “federal open market committee: about the fomc.” board of governors of the federal reserve system. “federal open market committee: faqs: what is the summary of economic projections?” board of governors of the federal reserve system. “federal open market committee: transcripts and other historical materials.” u.s. bureau of labor statistics. “consumer prices up 9.1 percent over the year ended june 2022, largest increase in 40 years.” federal reserve economic data (fred), federal reserve bank of st. louis. “federal funds effective rate.” cnbc. "here’s what changed in the new fed statement." board of governors of the federal reserve system. “minutes of the federal open market committee: june 13 14, 2023,” pages 3 7. reuters. "fed keeps rates unchanged, acknowledges economy is 'strong'" board of governors of the federal reserve system. “federal reserve issues fomc statement, february 01, 2023.” board of governors of the federal reserve system. “federal reserve issues fomc statement, march 22, 2023.” board of governors of the federal reserve system. “federal reserve issues fomc statement, may 03, 2023.”

copyright 2025 the associated press. all rights reserved. the federal reserve left its benchmark interest rate unchanged wednesday after cutting it three times in a row last year, a sign of a more cautious approach as the fed seeks to gauge where inflation is headed and what policies president donald trump may pursue. federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) screens display a news conference by federal reserve chair jerome powell on the floor of the new york stock exchange in new york, wednesday, jan. 29, 2025. (ap photo/seth wenig) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) the federal reserve left its benchmark interest rate unchanged wednesday after cutting it three times in a row last year, a sign of a more cautious approach as the fed seeks to gauge where inflation is headed and what policies president donald trump may pursue. federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) screens display a news conference by federal reserve chair jerome powell on the floor of the new york stock exchange in new york, wednesday, jan. 29, 2025. (ap photo/seth wenig) screens display a news conference by federal reserve chair jerome powell on the floor of the new york stock exchange in new york, wednesday, jan. 29, 2025. (ap photo/seth wenig) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) federal reserve chairman jerome powell speaks during a news conference after the federal open market committee meeting, wednesday, jan. 29, 2025, at the federal reserve in washington. (ap photo/jacquelyn martin) washington (ap)   the federal reserve left its benchmark interest rate unchanged wednesday after cutting it three times in a row last year, a sign of a more cautious approach as the fed seeks to gauge where inflation is headed and what policies president donald trump may pursue. in a statement, the fed said the job market is “solid,” and noted that the unemployment rate “has stabilized at a low level in recent months.” the fed also appeared to toughen its assessment of inflation, saying that it “remains somewhat elevated.” both a healthier job market and more stubborn inflation typically would imply fewer fed rate cuts in the coming months. in a news conference wednesday, fed chair jerome powell largely deflected questions about recent comments from president trump, including one from last week, when trump said he would lower oil prices and then “demand” lower rates. he also said he would speak with powell about it. “i’m not going to have any response or comment on whatever the president said,” powell said. asked if trump had communicated his desire for lower rates directly to powell, the fed chair said he had “no contact.” regarding the fed’s key rate, powell conveyed a more deliberate approach, noting that the economy is mostly healthy   the unemployment rate is a low 4.1% and growth topped 3% at an annual rate in the fall. “with ... the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” powell said. asked about the potential impact of the sharp policy changes trump has proposed regarding tariffs, immigration, tax cuts, and deregulation, powell said fed policymakers are “waiting to see which policies are enacted.” “we don’t know what will happen,” he added. “we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be.” kathy bostjancic, chief economist at nationwide financial, said powell’s comments suggest the fed won’t cut rates again until the middle of this year. “we are all in wait and see mode, including the fed,” she said. the fed reduced its rate last year to 4.3% from 5.3%, in part out of concern that the job market was weakening. hiring had slowed in the summer and the unemployment rate ticked up, leading fed officials to approve an outsized half point cut in september. yet hiring rebounded last month and the unemployment rate declined slightly, to a low 4.1%. powell has said it is harder to gauge where inflation is headed, in part because of increased uncertainty around what policies trump will adopt and how quickly they will affect the economy. higher tariffs and tax cuts could push inflation higher, while deregulation could possibly reduce it. the fed typically keeps interest rates high to slow borrowing and spending and cool inflation. in december, fed officials signaled they may reduce their rate just twice more this year. goldman sachs economists believes those cuts won’t happen until june and december. in november, inflation was just 2.4%, according to the fed’s preferred measure, not far from its 2% target. but excluding the volatile food and energy categories, core prices rose a more painful 2.8% from a year earlier. the fed pays close attention to core prices because they are often a better guide to inflation’s future path. powell said the fed wants to see “real progress on inflation or ... some weakness in the labor market before we before we consider” making further cuts. in a post to his truth social account late wednesday, trump criticized the fed for failing to curtail inflation, saying he would do so by “unleashing american energy production, slashing regulation, rebalancing international trade, and reigniting american manufacturing.” during the news conference, powell was also asked about trump’s executive orders intended to limit diversity, equity, and inclusion programs, which powell has previously backed. “as has been our practice over many administrations, we are working to align our policies with the executive orders as appropriate and consistent with applicable law,” he said. powell also addressed the fed’s decision earlier this month to leave the network for greening the financial system, an international group that sought to address how financial regulators and banks could address climate change. the fed had joined the group in 2020. powell said the group’s goals had expanded to things like addressing biodiversity that were “way beyond” the fed’s mission. “i think that the the activities of the ngfs are not a good fit for the fed, given our current mandate,” he said. most other central banks in developed countries are cutting their interest rates. the european central bank, for example, is widely expected to reduce borrowing costs at its next meeting on thursday. the bank of canada said wednesday it has also cut its rate, and the bank of england is also expected to do so next month. the bank of japan, however, is actually raising its rate from a rock bottom level. japan has finally experienced some inflation after decades of slower growth and bouts of deflation. a fed rate cut in march is still possible, though financial markets’ futures pricing puts the odds of that happening at under 20%. as a result, american households and businesses are unlikely to see much relief from high borrowing costs anytime soon. the average rate on a 30 year mortgage slipped to just below 7% last week after rising for five straight weeks. the costs of borrowing money have remained high economywide even after the fed reduced its benchmark rate. that is because investors expect healthy economic growth and stubborn inflation will forestall future rate cuts. they recently bid up the 10 year treasury above 4.80%, its highest level since 2023. powell acknowledged that higher rates have made it harder for many would be homebuyers to afford a home, and said that would likely continue. the stock and bond markets had muted reactions to the fed’s decision, which was widely expected. associated press writer josh boak contributed to this report. copyright 2025 the associated press. all rights reserved.

the federal reserve, the central bank of the united states, provides the nation with a safe, flexible, and stable monetary and financial system. federal open market committee monetary policy principles and practice policy implementation reports review of monetary policy strategy, tools, and communications institution supervision reports reporting forms supervision & regulation letters banking applications & legal developments regulatory resources banking & data structure financial stability assessments financial stability coordination & actions reports regulations & statutes payment policies reserve bank payment services & data financial market utilities & infrastructures research, reports, & committees working papers and notes data, models and tools bank assets and liabilities bank structure data business finance dealer financing terms exchange rates and international data financial accounts household finance industrial activity interest rates micro data reference manual (mdrm) money stock and reserve balances other regulations supervision & enforcement community development research & analysis resources for consumers the fomc holds eight regularly scheduled meetings during the year and other meetings as needed. links to policy statements and minutes are in the calendars below. the minutes of regularly scheduled meetings are released three weeks after the date of the policy decision. committee membership changes at the first regularly scheduled meeting of the year. foia the fomc makes an annual report pursuant to the freedom of information act. the fomc foia service center provides information about the status of foia requests and the foia process. 2025 | 2024 | 2023 | 2022 | 2021 | 2020 future year: 2026 pdf | html (released march 3, 2020) minutes: see end of minutes of march 15 meeting pdf | html (released march 15, 2020) minutes: pdf | html (released april 08, 2020) pdf | html (released march 23, 2020) note: a two day meeting is scheduled for january 26 27, 2027. each meeting date is tentative until confirmed at the meeting immediately preceding it. board of governors of the federal reserve system 20th street and constitution avenue n.w., washington, dc 20551

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"with today's action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive," chair jerome powell said at his post meeting news conference. "we can therefore be more cautious as we consider further adjustments to our policy rate." "today was a closer call but we decided it was the right call," he added. stocks sold off sharply following the fed announcement, with the dow jones industrial average closing down more than 1,100 points while treasury yields soared. futures pricing pared back the outlook for cuts in 2025, according to the cme group's fedwatch measure. "we moved pretty quickly to get to here, and i think going forward obviously we're moving slower," powell said. for the second consecutive meeting, one fomc member dissented: cleveland fed president beth hammack wanted the fed to maintain the previous rate. governor michelle bowman voted no in november, the first time a governor voted against a rate decision since 2005. the fed funds rate sets what banks charge each other for overnight lending but also influences a variety of consumer debt such as auto loans, credit cards and mortgages. the post meeting statement changed little except for a tweak regarding the "extent and timing" of further rate changes, a slight language shift from the november meeting. goldman sachs said the adjustment was "hinting at a slower pace of rate cuts ahead." the cut came even though the committee jacked up its projection for full year 2024 gross domestic product growth to 2.5%, half a percentage point higher than september. however, in the ensuing years the officials expect gdp to slow down to its long term projection of 1.8%. other changes to the summary of economic projections saw the committee lower its expected unemployment rate this year to 4.2%, while headline and core inflation according to the fed's preferred gauge were pushed higher to respective estimates of 2.4% and 2.8%, slightly higher than the september estimate and above the fed's 2% goal. the committee's decision comes with inflation not only holding above the central bank's target but also while the economy is projected by the atlanta fed to grow at a 3.2% rate in the fourth quarter and the unemployment rate has hovered around 4%. though those conditions would be most consistent with the fed hiking or holding rates in place, officials are wary of keeping rates too high and risking an unnecessary slowdown in the economy. despite macro data to the contrary, a fed report earlier this month noted that economic growth had only risen "slightly" in recent weeks, with signs of inflation waning and hiring slowing. moreover, the fed will have to deal with the impact of fiscal policy under president elect donald trump, who has indicated plans for tariffs, tax cuts and mass deportations that all could be inflationary and complicate the central bank's job. "we need to take our time, not rush and make a very careful assessment, but only when we've actually seen what the policies are and how they've been implemented," powell said of the trump plans. "we're just not at that stage." powell has indicated that the rate cuts are an effort to recalibrate policy as it does not need to be as restrictive under the current conditions. "we think the economy is in [a] really good place. we think policy is in a really good place," he said wednesday. with wednesday's move, the fed will have cut benchmark rates by a full percentage point since september, a month during which it took the unusual step of lowering by a half point. the fed generally likes to move up or down in smaller quarter point increments as its weighs the impact of its actions. despite the aggressive moves lower, markets have taken the opposite tack. mortgage rates and treasury yields both have risen sharply during the period, possibly indicating that markets do not believe the fed will be able to cut much more. the policy sensitive 2 year treasury yield jumped to 4.3%, putting it above the range of the fed's rate. in related action, the fed adjusted the rate it pays on its overnight repo facility to the bottom end of the fed funds rate. the so called on rpp rate is used as a floor for the funds rate, which had been drifting toward the lower end of the target range. got a confidential news tip? we want to hear from you. sign up for free newsletters and get more cnbc delivered to your inbox get this delivered to your inbox, and more info about our products and services. © 2025 cnbc llc. all rights reserved. a division of nbcuniversal data is a real time snapshot *data is delayed at least 15 minutes. global business and financial news, stock quotes, and market data and analysis. data also provided by

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where products appear on this site. while we strive to provide a wide range of offers, bankrate does not include information about every financial or credit product or service. bankrate is always editorially independent. while we adhere to strict editorial integrity , this post may contain references to products from our partners. here's an explanation for how we make money . our bankrate promise is to ensure everything we publish is objective, accurate and trustworthy. table of contents table of contents table of contents at the federal reserve’s first meeting in 2025, consumers are going to want what fed chair jerome powell simply can’t give them: an answer to how much longer interest rates are going to stay high. americans got a taste of the rate cuts they were craving last year. with inflation slowing and the job market flashing warning signs of an abrupt slowdown, officials on the federal open market committee (fomc) slashed their benchmark financing rate a full percentage point across three consecutive meetings. the federal funds rate now holds in a target range of 4.25 4.5 percent. those cuts didn’t appear to take much pressure off of consumers. most consumer borrowing costs remain the highest in over a decade, according to data tracked by bankrate. the 30 year fixed rate mortgage, meanwhile, actually ended up increasing despite the fed’s cuts. the fomc doesn’t look like it’s going to cut interest rates a fourth consecutive time when it wraps up its two day meeting on jan. 29. experts say a cut at the fed’s next rate setting gathering in march might not happen, either, if inflation stays sticky and the economy remains resilient. president donald trump’s tariff, immigration and tax policies could also complicate the fed’s rate cutting plans if they fuel more inflation. at the world economic forum’s annual meeting on thursday, the chief executive said he’d “demand” interest rates drop “immediately,” his first comments on fed policy since the start of his second term. the question now: is this no move meeting just a short skip or the start of a prolonged pause? powell himself foreshadowed that rate cuts may be on hold. in their post meeting assessment of the economy, policymakers admitted that inflation was cooling more slowly than they had hoped. powell said officials still think they’re on track to cut interest rates more this year, but they want to first gain more confidence that inflation is back on track. a stable job market is also affording them time to be patient, he added. fed officials have two economic objectives: low and steady inflation (or price stability) and ensuring everyone in the labor market who wants a job can find one (maximum employment). “the slower pace of cuts for next year really reflects both the higher inflation readings we’ve had this year and the expectation that inflation will be higher,” powell said. “if the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy more quickly.” at the time, many market participants thought the fed would be on the sidelines for only one meeting. last month, investors saw a 91 percent chance that officials would keep borrowing costs steady in january and a 45 percent chance that they’d pick back up with rate cuts by their next meeting in march, according to cme group’s fedwatch tool. but little has changed on the inflation front. prices in december rose for the third straight month to 2.9 percent, up from as low as 2.4 percent in september, according to the bureau of labor statistics’ consumer price index (cpi). energy prices popped the most since august 2023, while shelter costs and motor vehicle insurance stayed stubbornly high. the perceived odds of a march rate cut have since dropped to 28 percent as of jan. 24, cme group’s tool now shows. “between the december meeting and the march meeting, it did provide enough calendar room to see three full cycles of monthly economic data, particularly on the inflation front,” mcbride says. “but unless there’s a rapid reversal in the next two months, a march rate cut seems unlikely.” fed officials will likely avoid closing the door completely to a march cut, according to greg daco, chief economist at ey. price pressures have improved rapidly since peaking at a 40 year high of 9.1 percent in the summer of 2022, and many metrics give him hope that inflation will keep cooling. those include slowing wage growth, americans’ diminishing savings and a smaller jobs to workers ratio   all of which suggest businesses may have less pricing power and consumers could be more sensitive to price hikes. “fed policy needs to be forward looking,” daco says. “policymakers take every data release and extrapolate to infinity   that if a reading is stronger than expected, all future readings are expected to be stronger.” division may also be growing among fed officials about what to do next. in an interview with cnbc, fed governor christopher waller looked past the december pick up in inflation and instead noted slower price increases among items outside of food and energy. however, cleveland fed president bethany hammack   who dissented against the fed’s decision to cut interest rates in december   urged caution in a january interview with the wall street journal, saying “we still have an inflation problem.” there are also risks that inflation could gain speed again. powell will likely be asked about trump’s trade, immigration and tax policies, which could potentially lead to higher prices, according to economists surveyed in bankrate’s latest economic indicator poll. in the months since trump’s election, the chief central banker has repeated that it’s too soon for the fed to make fiscal policy part of its interest rate deliberations. “there’s nothing to model right now,” powell said first at a nov. 7 press conference. “we don’t guess, we don’t speculate, we don’t assume.” behind closed doors, though, the fomc might already be discussing it. fed staffers are likely running different economic scenarios from any of trump’s policies and informing the committee about the results, according to bill english, a professor at the yale school of management who formerly had one of the most influential staff positions at the central bank as director of the fomc’s division of monetary affairs. “you have to make some set of assumptions to do your forecasting,” english says. “then, the committee has to make the judgment call: how much do they want to see or predicate their policy decisions on?” powell told reporters in december that “some” policymakers had already incorporated “highly conditional estimates of economic effects” from fiscal policy in the forecasts that they updated in december. others didn’t, and some people didn’t say whether they did or did not, he said. it could mean that trump’s policies, not just higher inflation over the past few months, played a role in shifting the fed’s rate cut estimates for 2025. in projections updated in december, enough policymakers penciled in fewer rate cuts for 2025 that the median forecast fell from four cuts to just two. powell himself revised his rate forecasts after trump’s election in 2016, when he was still a fed governor. as fed chief, however, he’s been more mum on fiscal policy. during trump’s first term in the oval office, he likened powell to a golfer who “doesn’t know how to put” and frequently insisted that the fed cut interest rates. the chief executive renewed those jabs this week. “i think i know interest rates much better than they do,” he said from davos, switzerland, on thursday. “i think i know it certainly much better than the one who’s primarily in charge of making that decision.” the fed keeping interest rates steady this month means that the financing costs consumers see across the market are bound to stay historically high, underscoring the importance of chipping away at high cost debt, continuing to find the best places to park your cash and bracing for any volatility in financial markets. just like pricey financing costs, though, inflation also makes it more expensive to live. prices are up 22.5 percent since february 2020, requiring an extra $225 for the same goods and services that used to cost $1,000. the fed’s rationale for keeping interest rates high is that it will weaken price pressures   and hopefully give americans a chance to catch up. “we’ve been lulled to sleep with a lack of downside volatility in the market,” mcbride says. “and that will surely crop up again.” will the fed make an emergency rate cut? here’s what financial experts are saying november fed meeting preview: the fed eyes another rate cut as elections, hurricane uncertainties loom the fed’s latest meeting wasn’t just about interest rates. here’s why you shouldn’t overlook its balance sheet announcement july fed meeting preview: as unemployment rises and inflation slows, should officials cut interest rates now? bankrate.com is an independent, advertising supported publisher and comparison service. we are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self selected credit score range, can also impact how and where products appear on this site. while we strive to provide a wide range of offers, bankrate does not include information about every financial or credit product or service. bankrate, llc nmls id# 1427381 | nmls consumer access br tech services, inc. nmls id #1743443 | nmls consumer access © 2025 bankrate, llc. a red ventures company. all rights reserved.
u.s. economy the federal reserve cut interest rates by a quarter point, its third reduction this year, but suggested only two more reductions next year as inflation lingers. actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of this year and the next. 2 1 0 ’21 ’22 ’23 ’24 ’25 actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of next year. 2 1 0 ’21 ’22 ’23 ’24 ’25 source: federal reserve by karl russell jeanna smialek federal reserve officials made their third and final rate cut of 2024 at their meeting on wednesday. they also forecast two fewer rate reductions in 2025 than they had previously expected, as inflation lingers and the economy holds up. the fed has come a long way from just a few years ago: in 2022, inflation was more than twice its current rate and many economists thought that the central bank’s decisions might cause economic pain   and even a recession   as it rapidly lifted interest rates to slow demand and wrestle price increases back under control. that didn’t happen. the job market slowed without falling apart, and inflation cooled so substantially that the fed was able to begin cutting interest rates in september. but the fed is now entering a new phase in its journey toward an economic soft landing. officials thought that it was clear that rates needed to come down notably from their 5.3 percent peak, and they have steadily lowered them to about 4.4 percent by making three back to back reductions. policymakers do not want to cut rates so much that they reignite the economy, though   and they have now arrived at a point where it is uncertain how much further rates should fall. “our policy stance is now significantly less restrictive,” jerome h. powell, the fed chair, said during a news conference on wednesday. “we can therefore be more cautious as we consider further adjustments to our policy rate.” “from here, it’s a new phase,” mr. powell later added. the fed’s forecasts make clear that central bankers are poised to slow rate cuts notably over the next several years as stubborn inflation lingers. actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of this year and the next. 2 1 0 ’21 ’22 ’23 ’24 ’25 actual target rate latest projections 6 % 5 4 3 each dot represents what one fed official thinks the target rate should be at the end of next year. 2 1 0 ’21 ’22 ’23 ’24 ’25 source: federal reserve by karl russell fed officials predicted that they will cut rates to 3.9 percent in 2025 in their fresh economic estimates   suggesting that they will make just two rate cuts next year. they had forecast four when they last released economic projections back in september. they then expect to make two rate cuts in 2026, and one in 2027.