Federal Reserve Signals Slower Rate Cuts as Trump’s Economic Policies Loom

The Fed is expected to cut rates in December but may pause further reductions to assess inflation and potential impacts of Trump’s fiscal policies.

The Federal Reserve is widely expected to implement a 25 basis-point rate cut in December, marking the third cut since September 2024.
Fed officials, including Governor Michelle Bowman, advocate for a cautious approach to further rate reductions due to persistent inflation and labor market uncertainties.
Economists predict the Fed may pause rate cuts in early 2025, citing uncertainty surrounding President-elect Donald Trump’s proposed tariffs and fiscal policies.
Trump’s proposed 10% import tariff could raise U.S. inflation by 1%, with global inflationary effects expected to be more limited, according to analysts.
Central banks globally are easing rates after a period of aggressive tightening, with most G7 economies achieving a 'soft landing' despite earlier fears of recession.