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.
Christopher Rugaber, The Associated PressEconomist and professor of finance Jeremy Siegel explains his outlook on the market as he says the U.S. fed is slowing its rate cuts ahead of a 'precarious' year.
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. 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.
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. 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.
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