Fed Rate Cuts in 2025: Will the Central Bank Finally Ease the Pressure?
The Federal Reserve's next move is under the microscope—will 2025 be the year rates finally drop?
Markets are holding their breath as inflation data and economic signals clash. The Fed's 'higher for longer' mantra might be running out of road.
Here's what Wall Street isn't saying: rate cuts could spark a crypto rally that leaves traditional finance scrambling. Again.
One thing's certain—bankers will find a way to spin this as a win, no matter who gets crushed.
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Expectations have been for the Fed to cut interest rates twice this year. However, the chances of that are growing slim as Chairman Jerome Powell refuses to reduce rates. Some of the latest estimates claim consumers might not see a rate cut until December. That’s despite pressure from President Donald TRUMP to cut interest rates.
Why Won’t the Fed Cut Interest Rates?
Interestingly, President Trump’s policies are one of the reasons Powell hasn’t cut rates. The President’s tariffs and trade war have left the economy unpredictable, leaving Powell and other Fed members uncertain if rate cuts are the best decision right now.
This is on top of other economic concerns, such as inflation, which is what kicked off the increase in interest rates in 2022. Inflation soared higher at that time as the U.S. economy was coming out of the COVID-19 pandemic. In order to get inflation back down to 2%, the Fed started increasing interest rates.
Is Inflation Back Down to Expected Levels?
Inflation was last reported at 2.35%, still above the 2% the Fed is aiming for. As a result, interest rate cuts remain unlikely. Especially in light of current and upcoming tariffs on imports from multiple countries. While President Trump has used the tariffs to negotiate new trade deals and encourage U.S. manufacturing, it still leaves the economy in a state of uncertainty.
Investors who want to keep up with all of the latest economic data can do so with the TipRanks Economic Indicators Dashboard.
