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Tag: interest

January inflation gives Fed more reason to hold on interest rate cuts

Egg prices soared by more than 15% in January. (iStock)

Annual inflation increased to 3% in January, rising above expectations and giving the Federal Reserve further reason to slow down interest rate cuts.

Inflation increased 0.5% monthly, slightly exceeding expectations and above the previous month’s increase of 0.4%, according to the Consumer Price Index (CPI) released by the Bureau of Labor Statistics (BLS). Core CPI, which excludes food and energy, rose by 0.4% in January, coming in at the same level as December’s increase. This brought the year-over-year rate to 3.3%.

Shelter costs rose 0.4% and were the most significant contributor to the monthly increase in January, accounting for nearly 30% of the monthly increase in all items. Gas was up 1.8% over the month. Food prices continued to rise, increasing 0.4% last month. The food at home index rose 0.5%, driven primarily by the soaring costs of eggs, which increased 15.2% in January.

“The unexpected acceleration in inflation marks the third consecutive monthly uptick in the consumer price index and extends a reflationary trend since two consecutive flat months for the index in May and June 2024,” Jim Baird, Plante Moran Financial Advisors’ chief investment officer, said in a statement. “Against a backdrop of solid demand, inflation has accelerated. It’s a reality that may spook consumers who remember the Covid-19 era price spike all too well.

“It will also make President Trump’s proposed import tariffs a tougher sell than was the case during his first term, when both inflation and interest rates were exceptionally low,” Baird continued.

If you are struggling with high inflation, you could consider taking out a personal loan to pay down debt at a lower interest rate, reducing your monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score.

SENIORS TO GET MODERATE COST OF LIVING BUMP IN SOCIAL SECURITY PAYMENTS NEXT YEAR

The Fed pauses on further rate cuts

The increase in inflation, combined with a stable jobs market and economic growth, has given the Federal Reserve more room to work.

The Federal Reserve held interest rates at 4.5% to 4.75% in January, prompted by strong economic indicators that gave the central bank more room to wait. Federal Reserve Chair Jerome Powell said that the central bank intend to remain cautious about additional rate cuts so long as the job market remains solid and prices continue to climb.

“The murkiness of evolving trade policy creates a significant unknown for Fed policymakers who will have to grapple with the potential conflicting policy challenges of slower real growth and higher inflation,” Baird said. “While even bearish forecasts are a far cry from the stagflationary environment of the 1970s, the playbook would seemingly still apply.

“Arresting inflation is likely to remain the priority for the Fed, even at the expense of near-term growth,” Baird said. “The fear of inflation expectations becoming unanchored is just too much for policymakers to ignore.”

You can take out a personal loan before future rate hikes to help pay down high-interest debt. Visit Credible to find your personal loan rate without affecting your credit score.

FHFA ANNOUNCES HIGHER MORTGAGE LOAN LIMITS FOR 2025

How higher for longer impacts your wallet

All signs point to the Fed holding interest rates higher for longer, which means consumers will continue to be impacted by stubbornly elevated interest rates impacting a range of credit products, including credit cards, mortgages, unsecured personal loans and auto loans, according to Charlie Wise, TransUnion’s senior vice president of research and consulting.

“Consumers should avoid building and carrying large credit card balances, particularly in light of very high interest rates on this type of debt, and whenever possible pay more than the monthly minimums due on their cards,” Wise said in a statement.

Additionally, Wise advised that consumers keep a close watch on their credit profiles and keep them in the best shape possible so that when rates finally drop to a more manageable level, they are ready to refinance their existing debts into more affordable loans.

Using a personal loan to pay off high-interest debt at a lower rate could help you reduce your expenses and put money back in your wallet. You can visit Credible to find your personalized interest rate today.

BIDEN CANCELS MORE STUDENT LOANS WITH ONE WEEK LEFT TO HIS TERM

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

February 13, 2025
Trump calls for lower interest rates to go ‘hand-in-hand’ with tariffs: ‘Lets rock and roll, America’

Independent Institute senior fellow Judy Shelton breaks down the connection between oil prices and inflation ‘The Claman Countdown.’

President Donald Trump on Tuesday called out the Federal Reserve, saying the central bank should lower interest rates.

“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!” Trump said in a post on Truth Social. “Lets Rock and Roll, America!!!”

The president’s comments come a day after Fed Chairman Jerome Powell said on Capitol Hill that the central bank doesn’t need to “hurry” to lower interest rates.

FEDERAL RESERVE HOLDS INTEREST RATES STEADY AMID INFLATION UNCERTAINTY

“We do not need to be in a hurry to adjust our policy stance,” Powell testified before the Senate Banking Committee. “We know that reducing policy restraint too fast or too much could hinder progress on inflation. At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.”

Federal Reserve Chairman Jerome Powell testified before the Senate Banking Committee on Feb. 11, saying that the central bank does “not need to be in a hurry to adjust our policy stance.” (Mandel Ngan/AFP via / Getty Images)

Fed officials, at their most recent meeting in January, held the benchmark federal funds rate steady at a range of 4.25% to 4.5%.

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It follows three consecutive interest rate cuts at the central bank’s most recent meetings – including a 50-basis-point cut in September as well as a pair of 25-basis-point reductions in November and December.

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FOX Business’ Eric Revell contributed to this report

February 12, 2025
What would be the impact of a credit card interest rate cap?

A ‘Mornings with Maria’ panel provides their reactions to the December jobs report, detailing the impact it may have on the U.S. economy.

New legislation in Congress that was introduced by an unlikely duo of senators seeks to impose a credit card interest rate cap, with the potential for such a bill becoming law aided by President Donald Trump’s campaign pledge on the subject.

Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., introduced legislation that would cap credit card interest rates at 10% for five years after the bill’s enactment. The two populist senators touted the measure as a means of fulfilling a campaign pledge made by Trump’s campaign last year.

The bill’s introduction coupled with White House support for the proposal could allow for the idea to gain traction, although there would be consequences to the policy and it still faces a long road to enactment.

“Credit card rate caps have always been the longest of long shots because there’s so many people lined up against it for various reasons, but it shouldn’t surprise anybody that a rate cap is enormously popular,” Matt Schulz, chief credit analyst at LendingTree, told FOX Business.

JOSH HAWLEY, BERNIE SANDERS PROPOSE CAPPING CREDIT CARD INTEREST RATES AT 10%

Credit card interest rates could be capped at 10% under a bill offered by Sanders and Hawley. (iStock)

Schulz said that LendingTree conducted a poll that showed respondents continued to support the idea of a credit card interest rate cap even if it means restricted access to credit and diminished credit card rewards.

“It’s still a long shot, but there’s no question that the idea politically kind of has some wind at its back right now, and if it’s ever going to happen, this may be as likely a time as ever for it to happen,” he said.

Schulz added that credit cards offered by federally chartered credit unions are capped at 18%, which do still offer rewards but aren’t as lucrative as those offered by larger banks. He went on to say that a cap at that level or 20% would be significant for consumers dealing with credit card debt while potentially having a better chance at becoming reality.

US CREDIT CARD DEFAULTS SOAR TO HIGHEST LEVEL IN 14 YEARS

Several leading trade groups representing the financial services industry sent a letter to Hawley and Sanders outlining their opposition to the duo’s proposed 10% credit card interest rate cap. Signatories to the letter included the Consumer Bankers Association, America’s Credit Unions, American Financial Services Association, Bank Policy Institute, Independent Community Bankers of America, American Bankers Association and the National Bankers Association.

The letter cited economic research showing that government price setting on APR caps hurts consumers, in part because it “would eliminate access to credit cards for millions of consumers and drive them to sources of credit which are far more costly and less regulated.”

Sen. Bernie Sanders, I-Vt., accused financial institutions of “extortion” and “loan sharking” for having credit card interest rates over 25%. (Kevin Dietsch/Getty Images / Getty Images)

The groups noted the state of Illinois imposed a rate cap, which the Federal Reserve researched and found was responsible for reducing the number of loans to subprime borrowers by 38 percent. They also referenced a study by researchers at Dartmouth who found Oregon’s 36% all-in APR cap was responsible for “harming, not helping, consumers on average” and “restricting access caused deterioration in the overall financial condition of Oregon households.”

“As responsible and well-regulated financial institutions, we share the goals of reducing the cost of consumer credit and increasing financial inclusion. Unfortunately, the 10 percent rate cap proposed in this legislation would stifle our shared financial inclusion goals, reduce access to credit and push consumers to far more costly and less regulated lenders,” the groups wrote.

CONSUMER WATCHDOG WARNS COMPANIES AGAINST DEVALUING CREDIT CARD REWARDS, LAUNCHES TOOL TO AVOID SCAMS

Sen. Josh Hawley, R-Mo., said high credit card interest rates are “exploitative” and capping them would provide “meaningful relief.” (Tom Williams-Pool/Getty Images / Getty Images)

While it’s unclear whether Congress will consider legislation capping credit card interest rates, Schulz noted that there are still steps consumers can take to ease their financial burden.

“The good news is that there are plenty of things you can do yourself to lower your interest rates without waiting for Congress to come in as the cavalry in lowering rates. You can get a 0% balance transfer credit card if you have good credit. You could look at a low interest personal loan, that’s a good option if you can’t get a 0% balance transfer card,” he said.

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“You can even call your credit card issuer and ask for a lower rate. LendingTree did a survey last year where we found that 76% of people who asked for a lower interest rate on one of their credit cards got one, and the average reduction was about 6 percentage points which is really significant,” Schulz said. “So it’s absolutely worth the call, because that sort of success rate shows that it’s not just people with 800 credit scores and long track records who are getting their way – it’s regular folks too who really need the help.”

February 11, 2025
Josh Hawley, Bernie Sanders propose capping credit card interest rates at 10%

A ‘Mornings with Maria’ panel provides their reactions to the December jobs report, detailing the impact it may have on the U.S. economy.

A new bipartisan bill introduced by a pair of senators would cap credit card interest rates in an effort to help consumers and fulfill one of President Donald Trump’s campaign promises.

Sens. Josh Hawley, R-Mo., and Bernie Sanders, I-Vt., introduced legislation that would cap credit interest rates at 10% immediately upon the bill’s enactment into law. The cap would then remain in effect for five years.

“During the campaign, President Trump pledged to cap credit card interest rates at 10%,” Sanders said in a statement. “Today, I am proud to be introducing bipartisan legislation with Senator Hawley to do just that.”

“When large financial institutions charge over 25% interest on credit cards, they are not engaged in the business of making credit available. They are engaged in extortion and loan sharking,” Sanders added. “We cannot continue to allow big banks to make huge profits ripping off the American people.”

US CREDIT CARD DEFAULTS SOAR TO HIGHEST LEVEL IN 14 YEARS

Credit card interest rates would be capped at 10% for five years under the Sanders-Hawley bill. (iStock / iStock)

Hawley said in a statement that capping credit card interest rates at 10% like Trump campaigned on “is a simple way to provide meaningful relief to working people.”

“Working Americans are drowning in record credit card debt while the biggest credit card issuers get richer and richer by hiking their interest rates to the moon,” Hawley added. “It’s not just wrong, it’s exploitative. And it needs to end.”

Sen. Josh Hawley, R-Mo., said that credit card issuers are being “exploitative” with interest rates. (Tom Williams-Pool/Getty Images / Getty Images)

In the last Congress, Hawley introduced a bill to cap credit card interest rates at 18%, though it died in committee without receiving a vote.

The press release from Sanders and Hawley noted that in September the Trump campaign said: “President Trump has promised to cap interest rates at 10% to provide temporary and immediate relief for hardworking Americans who are struggling to make ends meet and cannot afford hefty interest payments on top of the skyrocketing costs of mortgages, rent, groceries and gas.”

HOW CREDIT CARD SWIPE FEES ARE AFFECTING SHOPPERS

Sen. Bernie Sanders, I-Vt., accused financial institutions with high credit card interest rates of “loan sharking.” (Kevin Dietsch/Getty Images / Getty Images)

Critics of proposals to cap credit card interest rates note that it would likely cause financial institutions to be more restrictive in extending credit and offering credit cards to borrowers with relatively poor credit scores, and potentially by reducing the credit card rewards they offer.

“There’s no question that a credit card rate cap would have a massive impact on credit cardholders beyond just reducing interest payments,” said Matt Schulz, chief credit analyst at LendingTree. “Banks have been vocal that a rate cap, even one much smaller than the 10% cap backed by President Trump, would lead to a dramatic reduction in credit card rewards and even to reduced access to credit for those with imperfect credit.”

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“However, it is also clear that most Americans are willing to accept both of those consequences if it means capping rates,” Schulz added, noting that a LendingTree survey from December found that two-thirds of cardholders would support a rate cap, even if it results in reduced rewards, while six in 10 support it even if it restricts access to credit for many.

February 4, 2025
Gabbard sheds light on Assad visit, expresses shock intelligence community showed no interest at the time

Director of national intelligence nominee Tulsi Gabbard shed further light on her 2017 meeting with then-Syrian dictator Bashar al-Assad, a trip that has come under the microscope since President Donald Trump nominated the former congresswoman.

“There is not a great deal in the public record about what you and Syrian dictator Bashar al Assad discussed for so long in January of 2017. And I think there’s a great deal of interest from the American people about what was discussed in that meeting. So what did you talk about? And did you press Assad on things like his use of chemical weapons, systematic torture and the killing of so many Syrians?” Sen. Martin Heinrich, D-N.M., asked Gabbard on Thursday.

Gabbard, when she served in the U.S. House, traveled to Syria in 2017, when she met with the dictator, whose government was overthrown years later in 2024. The visit has become a focal point of Democrats’ criticism of the DNI nominee, arguing the visit casts doubt on her worldview and judgment.

‘LIES AND SMEARS’: TULSI GABBARD RAILS AGAINST DEM NARRATIVE SHE’S TRUMP’S AND PUTIN’S ‘PUPPET’

Tulsi Gabbard testifies during a Senate Intelligence Committee hearing on her nomination to be director of national intelligence, on Capitol Hill on Jan. 30, 2025 in Washington, D.C. (Mandel NGAN / AFPGetty Images)

“Yes, senator, I, upon returning from this trip, I met with people like then-Leader Nancy Pelosi, and Steny Hoyer, talked to them and answered their questions about the trip,” Gabbard, who served in the U.S. House representing Hawaii from 2013 to 2021, responded.

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“And quite frankly, I was surprised that there was no one from the intelligence community or the State Department who reached out or showed any interest whatsoever in my takeaways from that trip. I would have been very happy to have a conversation and give them a back brief. I went with former Congressman Dennis Kucinich, who had been there many times before and who had met with Assad before. A number of topics were covered and discussed. And to directly answer your question, yes. I asked him tough questions about his own regime’s actions. The use of chemical weapons and the brutal tactics that were being used against his own people.”

Syrian President Bashar al-Assad, seen during the signing of the comprehensive program of strategic and long-term cooperation between Iran and Syria, on May 3, 2023 in Damascus, Syria. (Photo by Borna News/Matin Ghasemi/Aksonline ATPImages/Getty Images)

Former Speaker of the House Nancy Pelosi also met with Assad in 2007, despite then-President George W. Bush’s criticism of the visit at the time.

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“Were you able to extract any concessions from President Assad?” Heinrich asked Gabbard.

Tulsi Gabbard, President Donald Trump’s nominee to be director of national intelligence, arrives to testify during her confirmation hearing before the Senate Intelligence Committee in the Dirksen Senate Office Building on Jan. 30, 2025 in Washington, D.C. (Photo by Kevin Dietsch/Getty Images)

“No, and I didn’t expect to, but I felt these issues were important to address,” she continued.

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“Just in complete hindsight, would you, would you view this trip as, good judgment?” the Senate lawmaker continued.

“Yes, senator. And I believe that leaders, whether you be in Congress or the president of the United States, can benefit greatly by going and engaging boots on the ground, learning and listening and meeting directly with people, whether they be adversaries or friends,” Gabbard said.

Gabbard is appearing before the Senate Intelligence Committee on Thursday as part of her nomination process to serve as director of national intelligence under the second Trump administration.

January 30, 2025
Fed hits pause on interest rate cuts for now

Fed holds on further interest rate cuts. (iStock)

Interest rates will stay higher for longer as the Federal Reserve pauses further interest rate cuts to give inflation room to drop closer to its 2% target rate.

The Federal Reserve held interest rates at 4.5% to 4.75%, prompted by strong economic indicators that gave the central bank more room to wait. Federal Reserve Chair Jerome Powell said at a press conference on Wednesday that the Fed intends to remain cautious about additional rate cuts so long as the job market remains solid and prices continue to climb.

“Over the course of our three previous meetings, we lowered our policy rate by a full percentage point from its peak,” Powell said. “That recalibration of our policy stance was appropriate in light of the progress on inflation and the rebalancing in the labor market. With our policy stance significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance.”

Gross domestic product (GDP) grew at an annual rate of 2.3% in the fourth quarter of 2024, slightly lower than the expected 2.6% growth rate. In December, annual inflation increased to 2.9%, rising modestly above the 2.7% annual inflation rate of the previous month, according to the Consumer Price Index (CPI) released by the Bureau of Labor Statistics (BLS). The labor market is stable, and unemployment is low, at 4.1% in December.

“The nation’s economy continues to be resilient against long-term economic setbacks, which means that the Fed is in no imminent need to continue its rate cuts,” CoreLogic Chief Economist Selma Hepp said. “And with the economic activity expected to remain robust and continue to post a 2%+ growth rate, the case for further monetary loosening in the coming months is increasingly less compelling.”

If you’re worried about the state of the economy, you could consider paying down high-interest debt with a personal loan at a lower interest rate. Visit Credible to speak with a personal loan expert and get your questions answered.

BIDEN CANCELS MORE STUDENT LOANS WITH ONE WEEK LEFT TO HIS TERM

Mortgage rates likely to remain elevated

Interest rates are likely to remain untouched until the second half of the year, which could delay relief for homebuyers, according to David Sober, the SVP of Enterprise Business Development at Voxtur Analytics.

“Interest rate reductions [are] not expected until the second half of the year,” Sober said. “This keeps the housing economy in an extended period of malaise, with affordability at its lowest point in memory. Independent mortgage banks will continue to dominate the mortgage market due to the ability to offer more innovative ways to buy homes. It will be a pleasant surprise if mortgage rates dip to 6% in 2025.”

One bright spot is that the incoming President Donald Trump administration could spur more substantial economic growth and, therefore, higher incomes, giving Americans more buying power. Moreover, lower household tax rates are anticipated to boost disposable household income even if incomes don’t rise, according to the Realtor.com Housing Forecast.

Beyond those scenarios, Hepp said home builders continue to add more new homes to supply and are offering rate buydowns on new construction, keeping those sales strong.

Homebuyers can find competitive mortgage rates by shopping around and comparing options. You can visit an online marketplace like Credible to compare rates with multiple lenders at once.

FHFA ANNOUNCES HIGHER MORTGAGE LOAN LIMITS FOR 2025

What higher rates mean for your wallet

President Donald Trump said in a speech to economic leaders at the World Economic Forum in Davos, Switzerland earlier this month that he would “demand that interest rates drop immediately.” Powell declined to comment on the speech but said the Trump administration had not contacted him.

“As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals,” Powell said. “If the economy remains strong and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer.”

Consumers who may have anticipated a more aggressive rate reduction policy in 2025 will have to wait longer for relief from the high borrowing costs incurred during the rate increases that the Fed implemented in recent years to combat inflation.

“While inflation concerns have significantly abated, they still remain,” Michele Raneri, vice president and head of U.S. research and consulting at TransUnion said in a statement. “As a result, it is quite possible that there will be fewer rate cuts over the course of next year than anticipated only a few months ago. Consumers should continue to monitor their own credit scores and credit reports to make sure they are in the best possible position to act when rates do come down.”

Using a personal loan to pay off high-interest debt at a lower rate could help you reduce your expenses and put money back in your wallet. You can visit Credible to find your personalized interest rate today.

SENIORS TO GET MODERATE COST OF LIVING BUMP IN SOCIAL SECURITY PAYMENTS NEXT YEAR

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

January 30, 2025
Trump blasts Fed, Jerome Powell for not cutting interest rates

Sen. Rand Paul, R-Ky., discusses the importance of cutting the federal budget on ‘Making Money.’

President Donald Trump unleashed on the Federal Reserve and Chair Jerome Powell on Wednesday, after the central bank decided to hold interest rates steady rather than making a cut, as the president had wanted.

“Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing, but I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!” Trump wrote on Truth Social.

President Donald Trump (CHIP SOMODEVILLA/POOL/AFP via Getty Images / Getty Images)

“The Fed has done a terrible job on Bank Regulation,” the president continued. “Treasury is going to lead the effort to cut unnecessary Regulation, and will unleash lending for all American people and businesses. If the Fed had spent less time on DEI, gender ideology, ‘green energy, and fake climate change, Inflation would never have been a problem. Instead, we suffered from the worst Inflation in the History of our Country!”

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This is a developing story. Check back for updates.

January 29, 2025
Federal Reserve holds interest rates steady amid inflation uncertainty

Kudlow panelists John Carney and Brian Brenberg discuss job growth and the Feds moves.

The Federal Reserve on Wednesday announced that it will leave interest rates unchanged amid uncertainty about inflation and economic conditions.

The Fed’s decision leaves the benchmark federal funds rate at a range of 4.25% to 4.5% and follows three consecutive interest rate cuts at the central bank’s most recent meetings – including a 50-basis-point cut in September as well as a pair of 25-basis-point reductions in November and December.

“Recent indicators suggest that economic activity has continued to expand at a solid pace,” wrote members of the Federal Open Market Committee (FOMC), the group responsible for guiding the Fed’s monetary policy. “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.”

The FOMC statement said that the Fed continues to pursue its dual mandate of achieving maximum employment and inflation at 2% over the longer run. It added that the “economic outlook is uncertain, and the Committee is attentive to risks to both sides of its dual mandate.”

FOMC members were unanimous in the decision to leave rates unchanged at this time. The committee’s statement added that policymakers “would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals” and that it will consider a range of information including labor market data, inflation pressures and expectations, as well as financial and international developments as it considers its next move.

Fed Chair Jerome Powell will outline the central bank’s decision at a press conference where he will likely face questions about how policymakers view the impact of President Donald Trump’s economic agenda. He may also face questions about whether they considered his call for lower interest rates in their decision.

This is a developing story. Please check back for updates.

January 29, 2025
What will the Fed do with interest rates and how will Trump react?

Speaking before the World Economic Forum in Davos, Switzerland, Trump said he’ll call for interest rates to be lower than current levels. A possible sign he is setting up a possible battle with the Federal Reserve.

The Federal Reserve is set to announce its next interest rate move on Wednesday, which could prompt a reaction from President Donald Trump, who recently called for the Fed to lower interest rates.

Members of the Federal Open Market Committee (FOMC) are expected to leave the target for the benchmark federal funds rate unchanged at a range of 4.25% to 4.5% – which would be the central bank’s first pause in this rate-cutting cycle following three consecutive cuts that brought rates down from 5.25% to 5.5%.

Inflation has persisted in the economy despite easing considerably from the 40-year high of 9.1% annual inflation recorded in June 2022. The most recent reading of the consumer price index (CPI) came in at 2.9%, above the Fed’s 2% target rate. Due in large part to stubborn inflation, the probability of Fed pause at the January meeting was 99.5%, according to the CME FedWatch tool.

The Fed’s anticipated pause could prompt Trump to renew his criticism of the central bank and Fed Chair Jerome Powell, following the president’s call for lower interest rates last week.

TRUMP SAYS HE WON’T FIRE FED CHAIR JEROME POWELL

President Donald Trump nominated Fed Chair Jerome Powell to the role in 2017 but has criticized the central bank’s policies under his leadership. (SAUL LOEB/AFP via Getty Images / Getty Images)

In a speech to the World Economic Forum last week, President Trump said that he plans to bring down the price of oil and, in turn, energy prices to address inflation – which he said should serve as the impetus for the Fed to cut interest rates.

“With oil prices going down, I’ll demand that interest rates drop immediately. And, likewise, they should be dropping all over the world. Interest rates should follow us,” Trump said.

Trump, who nominated Powell to his role as Fed chair in 2017, has criticized the chairman repeatedly over the years. During his first term in the White House, Trump threatened to fire Powell and called him a “bonehead.”

While Trump was campaigning to return to the White House last year, he criticized the Fed’s interest rate cuts as “political” – though he said in June that he wouldn’t attempt to fire Powell and reiterated that last month.

ODDS OF U.S. RECESSION DECLINING: NABE ECONOMISTS

January’s Federal Reserve meeting is the first since the start of President Donald Trump’s second term. (SHAWN THEW/Pool via REUTERS / Reuters Photos)

The potential impact of Trump’s economic policies, including his plans for tax cuts and federal spending as well as tariffs on imports, will likely feature prominently when Powell speaks to the press Wednesday after the Fed’s decision is announced.

Bank of America Global Research wrote in a note to investors previewing the Fed meeting that they expect Powell’s post-meeting press conference will include a heavy focus on the Fed’s next move as well as how the central bank plans to weigh Trump’s policies as they anticipate future rate cuts or further pauses.

“Powell will probably get asked again about the Fed’s response to the Trump policy agenda. We think he will stick to his stance that there is a lot of uncertainty about which policies will get implemented, and the Fed shouldn’t pre-judge or preempt them,” the Bank of America economists wrote. “But he will also probably note that some FOMC members (e.g. Waller and Williams) have already integrated policy into their outlook.”

FED MINUTES SHOW POLICYMAKERS SEE IMMIGRATION, TARIFF SHIFTS CREATING INFLATION UNCERTAINTY

Federal Reserve Chair Jerome Powell has said the central bank will base its decisions on the latest trends in economic data. (Photo by Liu Jie/Xinhua via Getty Images / Getty Images)

Earlier this month, the FOMC released the minutes of its December meeting in which policymakers cited a high degree of uncertainty about the economic impact of potential changes in trade and immigration policy.

That uncertainty, along with persistent inflation in the regular economic data releases, suggested that the process of slowing inflation back to its 2% target “could take longer than previously anticipated.”

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With inflation lingering, Fed watchers expect policymakers will take a slower approach to rate cuts in 2025. The probability of the Fed holding rates steady for its next meeting in March was 68% as of Tuesday afternoon, according to the CME FedWatch tool.

January 29, 2025