From CNBC: 2025-01-08 14:15:13

Federal Reserve officials expressed concern about inflation and the impact of Trump’s policies at their December meeting, prompting a slower approach to interest rate cuts. Trump’s plans for tariffs, deregulation, and deportations create uncertainty. FOMC members lowered the borrowing rate and expect only two cuts in 2025, indicating a cautious approach.

Participants at the meeting discussed the potential effects of changes in immigration and trade policies, noting increased upside risks to inflation. The Fed cut the benchmark rate to 4.25%-4.5% but reduced the expected number of cuts for 2025. The pace of future cuts is likely to be slower, depending on economic data.

While inflation remains above the Fed’s 2% target, officials expect it to decrease gradually. Powell emphasized the need for a gradual approach given the high uncertainty. Individual members expect two more rate cuts in 2026, possibly followed by one or two more, aiming for a long-run fed funds rate of 3%.

Read more: Fed minutes January 2025: