By Christopher Lugarver, Economics Writer of AP Communication
The Washington (AP) -The Federal Reserve is almost certain that President Donald Trump will immediately demand a low interest rate, and will not change the major interest rates at this week’s policy conference.
The Fed staff, led by Jerome Powell, has been reduced from 5.3 % in two years to about 4.3 % for three consecutive times in three consecutive times. However, some recent economic reports that show some progress in healthy employment and inflation have stated that policy proppons will slow down this year’s interest rate reduction. It suggests that some reductions are rarely necessary.
The two -day meeting ending on Wednesday may be a peaceful pure, but it is still a turbulent year for the Fed. Last Thursday, Trump revealed that he was hoping to comment on interest policies and said, “I know that interest rates are much better than them.”
At the same time, the Fed officials are navigating the delicate period of the economy. They want to maintain a sufficient height to push inflation to 2 % goals. 。
When he was last in the White House, Trump threatened to fired Powell, who was appointed in late 2017, but has recently retreated such a threat. The term of Powell as a chair ends in May 2026, where Trump’s alternative.
Until then, Trump’s comment on Thursday expects he regularly publish the Fed, despite the previous several decades of the president of the central bank, a previous president of the President of the Central Bank. Suggests. Former President Joe Biden re -elected Powell, not to replace him, but nodded the independence of the central bank from politics.
Vincent Reinhart, a Fedy Investment’s Chief Economist and former Fed Economist in the Fed, stated that Powell would not affect his policy decision.
“If you like your independence, you had to live with criticism,” said the line hart. “If you talk all, it’s not a particular concern for the Fed. I think Powell understands that it is the rule of the game.”
On the other hand, Fed officials clearly indicate that in January, at least in January, they hope to skip rate hiking at least in January.
“We need to make sure what will happen in January,” said CNBC interviewed by Governor Christopher Waller earlier this month. “I need to see a little more progress in inflation,” he added, but he also said to their target, “very close.”
According to the Fed priority gauge, the annual inflation rate in November was only 2.4 %, but it was only slightly higher than the goal, but has been stuck in it for about six months. Still, there are signs that the price should cool down in the second half of this year. With the rapid increase in the construction of apartments, rental costs have been reduced, and car insurance inflation has also slowed down.
Some officials, including Beth Hammack, the president of the Fed Cleveland Branch, argue that inflation sustainability should continue to increase the key rate. Hamac voted against the Fed’s quarter point cut last month.
Employment was rebounded in December, and the downshift was reversed in the fall of the FRB. Policy implementers agreed in September to reduce the Fed key rate by half. This was because I was worried that the employment market at the time could lead to a recession. However, the unemployment rate was chopped at 4.1 % last month. Sudden deceleration of employment can spur the Fed to reduce the rate quickly.
In December, the Fed officials indicated that they are hoping to lower the fee twice this year. However, 19 committees who make a decision on interest rates are clearly divided. Some officials, such as Wallers and Austangoursby, president of the Fed Chicago Branch, are hoping that inflation will continue to cool, and the Fed rates do not need to be so high.
Others, such as Hamac and Jefflee Schmidt, the president of the Kansas City Branch, say that inflation is still beyond the goal and the economy is healthy, so it is not necessary to reduce borrowing costs or at least not. I am.
The biggest unknown for this year’s Fed is whether Trump imposes tariffs, how much they clean, and whether they push up the price. A large -scale expulsion of immigrants can also make employers pay more money and fill their work.
Most economists predict that extensive tariffs are likely to increase the number of percentage points for the number of inflation. Customs duties are officially imposed, and it can take several months to evaluate the effects on the economy. I don’t think some economists will have an impact until next year.
Former Governor Fed Governor Kevin Warsh, a candidate for Powell, is a recent Wall Street Journal, promises to reduce Trump’s regulations reducing corporate costs and inflation. He claimed that by reducing it, he could push in the opposite direction.
Initially issued: January 27, 2025 9:29 am
