Fed Cuts Interest Rates Again Amid Uncertainty Over Trump Policies
The Federal Reserve announced a second consecutive rate cut, lowering the federal funds rate by 25 basis points to a range of 4.5% to 4.75%. This move follows the Fed’s September rate cut and was widely expected by economists and investors. While the reduction aims to stimulate the economy, concerns about inflation have emerged, largely due to President-elect Donald Trump's proposed economic policies, including potential tariffs. Fed Chairman Jerome Powell reassured the public of the Fed's independence, stating that he would not resign if Trump asked him to and emphasizing that the president cannot legally remove the Fed chair.
Despite the recent cuts, economists from leading financial institutions remain cautious about future rate changes, warning that Trump's policies could lead to inflation and slow further cuts. Experts from JPMorgan, Bank of America, and Deutsche Bank highlight how aggressive trade tariffs could force the Fed to pause rate cuts or even increase rates if inflation rises. These economists project a slower pace of cuts moving forward, with some predicting the rates may stay higher through 2025 if inflation remains stubborn. The ongoing economic uncertainty has already affected mortgage rates, which have climbed to their highest in three months, reflecting broader concerns in the market.
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