Overview

• The Federal Reserve is expected to maintain its current interest rate range of 4.25%-4.50% during its January 28-29 meeting after three rate cuts in late 2024.
• Rising bond yields, with 10-year Treasury notes reaching mid-4% and 30-year mortgage rates climbing to 7%, are increasing borrowing costs and raising concerns about long-term economic growth.
• President Donald Trump's second-term policies, including potential import tariffs and immigration measures, are creating uncertainty about inflation and labor market dynamics.
• The U.S. economy showed resilience in 2024, with unemployment ending the year at 4.1% and inflation nearing the Fed's 2% target, but inflationary pressures could persist due to policy shifts and market reactions.
• Fed Chair Jerome Powell has emphasized a cautious approach to monetary policy, as officials weigh the impact of fiscal policies and bond market developments on the broader economy.