Federal Reserve officials are expected to keep interest rates stable during their first policy meeting of the second Trump administration, frustrating President Donald Trump, who has been pressuring the central bank to lower rates. Trump, who has been vocal about his views on monetary policy, criticized Fed Chairman Jerome Powell whom he appointed. Despite Trump’s pressure, analysts believe the economy is strong enough to not require a rate cut at this time, given the lower inflation rate and improvements in unemployment and consumer spending. The Fed has already cut rates over the past three meetings, but the delicate balance of maintaining borrowing costs to control inflation without causing a recession has become more challenging due to Trump’s economic agenda, including tariffs. As the new administration takes office, Fed policymakers face uncertainty in how to proceed with rate cuts due to potential inflation risks related to Trump’s policies on trade and immigration. This uncertainty could impact the Fed’s long-held inflation target of 2%. Ultimately, the decision on rate cuts this year will be influenced by the Trump administration’s policies and their potential impact on inflation and economic growth.
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