Key Takeaways
- Federal Reserve Chair Jerome Powell signaled uncertainty over the pace and likelihood of further interest rate cuts through 2025.
- The central bank faces conflicting pressures between persistent inflation and the need to support economic growth.
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The Federal Reserve Chair Jerome Powell today signaled uncertainty about the pace of interest rate cuts through 2025, tempering market expectations for monetary easing.
Powell’s comments come as the central bank navigates competing pressures from inflation concerns and economic growth considerations. The Federal Reserve cut rates by 25 basis points in September 2025.
Median projections from Federal Reserve officials indicate a potential total of 50 basis points in additional cuts by year-end, though Powell emphasized these are not guaranteed and remain contingent on incoming economic data.
The central bank has revised its 2025 outlook to include “stagflation-lite” risks, with unemployment potentially rising and inflation sticking around 3.1%. This economic backdrop makes further rate cuts dependent on data performance rather than predetermined schedules.
Market pricing currently aligns with expectations of rates falling to 3.75% by the end of 2025. However, investor sentiment could shift if data shows persistent inflation or labor market weakness.
Under President Donald Trump’s administration, the Federal Reserve faces public pressure for more aggressive rate reductions to stimulate economic growth. The central bank previously paused rate cut cycles during periods of uncertainty, as seen in 2019 amid trade tensions.
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