Fed Predicted to Hold Rates Steady Amid Uncertainty on Trump

Written by Elvis Guaman

January 29, 2025

The Federal Reserve is widely expected to hold interest rates steady at its upcoming FOMC meeting, following a series of three consecutive rate cuts at the end of 2024. Central bank officials are signaling that the current policy stance is appropriate for now, as they assess the broader economic landscape. However, the real focus will likely shift to Fed Chair Jerome Powell’s afternoon press conference, where all eyes will be on his response to a growing uncertainty: President Donald Trump’s recent tariff threats.

Trump has threatened to impose tariffs on Mexico, Canada, and China as early as this Saturday, a move that economists fear could escalate inflationary pressures just as the Fed has worked to get inflation under control. This potential trade disruption comes at a time when the Fed is keen on maintaining price stability, and market participants are anxious about how Powell will navigate the issue.

JPMorgan’s chief economist, Michael Feroli, predicts that Powell will likely take a “duck and cover” approach during his press conference, sidestepping direct commentary on the political developments while maintaining the Fed’s neutral stance. However, the central bank will undoubtedly need to remain vigilant on the broader economic impacts of any potential tariff actions, especially if inflationary pressures rise as a result.

As the meeting unfolds, the market will be watching closely for any signs of how the Fed plans to adjust its policy in response to both domestic and global challenges. For now, it seems the central bank is opting for caution, waiting to see how these geopolitical tensions and trade decisions unfold before making further moves.

 
 
 
 

Author

FOLLOW US

COMMODITIES

LIVE FOREX RATES

Related Articles

UPDATE : Trump Halts Mexico Tariffs After Border Security Deal

UPDATE : Trump Halts Mexico Tariffs After Border Security Deal

In a surprising turn of events, President Donald Trump has decided to pause the new 25% tariffs set to begin Tuesday on goods entering the United States from Mexico. The decision comes after Mexican President Claudia Sheinbaum agreed to deploy 10,000 soldiers to the...