The Federal Reserve is expected to maintain current interest rates at its first policy meeting since Donald Trump’s return to office. The decision, due Wednesday at 2 p.m. ET, comes amid recent statements from President Trump advocating for lower rates.
Speaking at the World Economic Forum in Davos via video call, Trump expressed his intention to push for immediate rate reductions, both domestically and internationally. His comments continue a pattern of publicly discussing monetary policy, breaking from the traditional presidential practice of maintaining distance from Fed decisions.
The economic landscape has shifted significantly since Trump’s previous term ended in 2021. Current indicators show inflation at 2.9% as of December, above the Fed’s 2% target but considerably lower than during the post-pandemic period. The job market remains resilient, with unemployment at 4.1% in December, while consumer spending continues to show strength. GDP growth exceeded 3% for two consecutive quarters as of December.
The Fed has already implemented three consecutive rate cuts, bringing the benchmark rate from 5.25%-5.5% to 4.25%-4.5%. While further reductions are anticipated this year, analysts don’t expect changes at Wednesday’s meeting.
Economic experts note that the Fed’s challenge of balancing inflation control with avoiding recession has become more complex due to the new administration’s economic policies, particularly regarding trade. The first Trump-era tariff policy is scheduled for Saturday.
Chairman Jerome Powell, whose term runs until May 2026, will deliver remarks following the rate announcement. Despite Trump’s renewed criticism of Powell, whom he appointed in 2017, the President has stated he won’t seek to remove him before his term concludes.
Economists suggest that while the economy remains strong, factors such as potential trade and immigration policies could impact inflation and influence future Fed decisions, though officials are unlikely to publicly acknowledge these political considerations.
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