The Federal Reserve is expected to cut interest rates by 25 basis points on Thursday and avoid an unnecessary surprise less than two days later. the election of Donald Trump as the next president.
“They should just cut it, kneel down and not say anything new,” said Luke Tilley, chief economist at Wilmington Trust.
However, this does not mean that today’s negotiations in Washington will be smooth sailing.
Fed policymakers should understand recent developments that indicate a strong economy, persistent inflationand a A labor market disrupted by weather conditions and labor strikes.
And there can be a conflict between those who want to cut, who can help for now, and those who can help to cut along with the language designed to talk gradually the way to reduce in the future.
Fed officials are hoping that central bank chairman Jerome Powell will agree on a smaller cut, following the biggest cut of 50 basis points in September.
Read more: What Fed cuts mean for bank accounts, CDs, loans, and credit cards
Powell will face questions at a press conference about the results of the election and what it may mean for his role as chairman and the future of central bank policy.
The press is sure to ask him questions about how Trump’s promises of higher tariffs and immigration deportations will affect the economy, the deficit, and inflation — and thus the way the economy moves forward.
There are concerns that Trump’s policies could raise prices and wages, making the Fed’s mission to cut interest rates to 2% difficult.
The Fed chair could influence the outcome of new regulatory policies. management management management of the US economy.
Powell reiterated, as he has done all year, that politics does not affect the Fed’s decision-making.
It remains unclear what the decision means for Powell himself. It’s time for the central bank end in May 2026, The next president will also be able to choose the next face of the US monetary policy.
Trump has made it clear, even if he promoted Powell to his current position, that there will be no third term if he wins. And Trump loyalists already have he has been playing for months as a result.
Many of these names include figures who have surrounded Trump for many years on economic policy – from former Fed governor Kevin Warsh, who was on the final list, to Kevin Hassett, who worked in the White House as Trump’s senior adviser.