The Fed Is About to Hit Pause on Rate Cuts. Here's Why.

[mahatmakanejeeves]

The Fed Is About to Hit Pause on Rate Cuts. Here’s Why.

Faced with a solid economy and mounting inflation concerns, the U.S. central bank has said it will “move cautiously” on cutting interest rates.

By Colby Smith
Reporting from Washington
Jan. 28, 2025
Updated 9:10 a.m. ET

At the Federal Reserve’s final gathering of 2024, Chair Jerome H. Powell announced that the U.S. central bank was embarking on a “new phase” in how it would set interest rates.

The Fed planned to “move cautiously” with cuts going forward, Mr. Powell told reporters at the time, reflecting officials’ thinking that they could afford to be patient with scant signs of an impending recession and lingering inflationary pressures. On Wednesday, the Fed is set to put that approach into action, pressing pause on further reductions for the first time since they began lowering borrowing costs in September.

The question now looming large over Wall Street and Washington is just how long the Fed will be on hold. ... For President Trump, who in his first week in office claimed to have a better understanding of interest rates than officials at the Fed, a pause of any length is likely to be seen as too long. Speaking to attendees at the World Economic Forum in Davos, Switzerland, he said that as his economic policies drove down the price of oil, he would “demand that interest rates drop immediately.”

But for policymakers and the economists, investors and former Fed officials who follow their actions closely, the timeline looks very different. ... “There is no compelling reason to cut,” said Loretta Mester, who retired as president of the Cleveland Fed in June. “I would want to see convincing evidence that inflation has resumed moving down and right now, I don’t think we have that.”

{snip}

[Lonestarblue]

1. They know that Trump's policies will send inflation soaring.

[House of Roberts]

3. And when inflation goes up,

the Fed will attack worker gains as the cause, instead of attacking Trump's corrupt policies, because harming the future of the working class is always the best course of action.

[bucolic_frolic]

2. Uncertainty means the Fed won't move either way until the path is clearer

We could see the economy falter as federal spending craters, making for deflation, or we could see inflation, panics and hoarding as goods dry up. Unpredictable.

[jls4561]

4. With the Drumph administration spending money like a drunken Hegseth,

The nation’s debt increasing in order to satisfy the Felon’s need for “optics”, is it any wonder that the Fed should be wary about lowering interest rates? Did you see Rachel’s segment on the cost of military flights so the admin can look tough?
Of course Drumph wants lower interest rates to prop up his teetering empire of tacky, bed bug ridden whorehouses. And SMelania is gonna need another new kidney soon.