Fed officials advocate slowdown in rate cuts: Fed Minutes
Federal Reserve's Concerns on Inflation and Interest Rates
In a meeting held on December 17-18, Federal Reserve officials expressed concerns about inflation and decided to slow down the rate cuts. The minutes from the meeting, released recently, highlighted worries about the impact of President Donald Trump's policies on inflation control efforts.
Interest Rate Decisions
The officials agreed to lower the central bank's benchmark borrowing rate to a target range of 4.25-4.5%. However, they emphasized a cautious approach to further rate cuts, waiting for more confidence that inflation would sustainably move towards the 2% target.
Impact of Trade Policies
There were discussions on how changes in trade policies, including potential tariffs on China and other partners, could affect the U.S. economy. The Federal Reserve members showed caution regarding these policies.
Future Economic Outlook
Despite concerns, increased consumer spending, a stable labor market, and strong economic activity in 2024 suggest a positive outlook for GDP growth. Officials anticipate inflation to reach the 2% target by 2027, with two more rate cuts expected in 2026, potentially reducing the rate to 3%.
Next Steps
The Federal Reserve plans to discuss balance sheet issues in future meetings to guide decisions on slowing the pace of runoff. Future policy moves will depend on incoming data, not a fixed schedule.
Doubts Revealed
Federal Reserve
The Federal Reserve, often called the Fed, is like a big bank for the United States. It helps control the country's money and keeps the economy stable.
Inflation
Inflation is when the prices of things we buy, like food and toys, go up over time. It means money doesn't buy as much as it used to.
Interest Rates
Interest rates are like the extra money you pay when you borrow money from a bank. If rates are high, borrowing money costs more.
Trump's Policies
These are the rules and decisions made by Donald Trump when he was the President of the United States. They can affect how the economy works.
Benchmark Rate
The benchmark rate is the main interest rate set by the Federal Reserve. It influences other interest rates in the economy, like those for loans and savings.
Trade Policies
Trade policies are rules about how countries buy and sell things with each other. They can affect how much things cost and how many jobs there are.
Your email address will not be published. Required fields are marked *