Blitz Bureau
WASHINGTON: Federal Reserve officials expressed considerable uncertainty at their meeting recently about the future course of the economy – and especially inflation – given expectations of what the incoming Trump administration may do in terms of policy, said a report byusnews.com Minutes of that meeting, it said, show that, with one exception, members of the Fed’s Open Market Committee voted to lower interest rates by a quarter point but signaled the likelihood of fewer cuts to come in 2025.
Although the minutes did not mention Trump by name, it is clear from the comments that officials were as unsure of what the new administration will do when it takes office on January 20 as the rest of America, said the website report.
Trump made significant promises to expand and increase tax cuts, restrict immigration and impose high import tariffs on America’s leading trading partners.
“All participants judged that uncertainty about the scope, timing, and economic effects of potential changes in policies affecting foreign trade and immigration was elevated,” the minutes said.
Still, the overall tenor of the minutes reflects confidence that the economy continues to expand, the labour market has cooled but is still growing, and inflation is coming down but not quite as quickly as the Fed would like. “The risks around the inflation forecast were seen as titled to the upside,” it said.
The committee is set to meet on January 28-29, with most analysts expecting it to pause on lowering rates after its decision in December to cut rates by 25 basis points. The minutes reflected that the committee “was at or near the point at which it would be appropriate to slow the pace of policy easing.”
“Uncertainty has come to the Fed,” said David Russell, global head of market strategy at TradeStation. “Policymakers are increasingly unsure about how tax cuts, tariffs and immigration rules will impact the economy and inflation. They share this anxiety with investors struggling to plan for the incoming Trump Administration. Everyone’s in wait-and-see mode over the next few weeks. The Fed is no longer data dependent. It’s now Trump dependent.”
