Fed Chairman Powell expected to keep interest rates steady despite Trump's calls for lower rates

From CNBC: 2025-01-28 16:46:12

Federal Reserve Chairman Powell is expected to keep interest rates steady despite Trump’s calls for lower rates. Market pricing indicates a near-100% certainty that rates will remain at 4.25%-4.5% until June as officials weigh various factors that could complicate policymaking this year. The decision will be announced Wednesday at 2 p.m. ET.

Former Dallas Fed President Kaplan believes the Fed should hold steady on rates, citing potential disinflationary factors like government spending cuts, regulatory reviews, and energy sector changes. Trump’s tariffs and deportations could drive up prices and labor costs. Powell may face questions on rates during his news conference at 2:30 p.m. ET.

The Fed will not update its quarterly economic projections at this meeting, including the “dot plot” of interest rate estimates. Investors will rely on the post-meeting statement and Powell’s news conference for insights. Former Kansas City Fed President George emphasized the importance of the Fed following its legislative mandate for price stability.

Read more: Fed meets for first time since Trump’s term started. What to expect