Abdelrahman
The Federal Reserve decided to halt interest rate cuts last month, and the minutes from their January meeting indicate that this pause could extend for quite some time.
The official record from the central bank’s meeting on January 28-29, which was made public on Wednesday, revealed that while officials have not completely ruled out the possibility of future rate reductions, they acknowledge the challenges in controlling inflation. They also expressed concerns regarding the unpredictability of President Trump’s economic policies. Consequently, they have concluded that remaining cautious until they gain clearer insight into the economic landscape is the most prudent approach.
As long as the labor market remains robust, officials believe they need to see more substantial advancements in inflation before making any additional changes to the federal funds rate target range. Furthermore, a majority of them underscored the importance of a “careful approach” to future monetary policy decisions, citing the prevailing high levels of uncertainty.
The latest meeting occurred shortly after President Trump returned to office, during which he reiterated his commitment to restructure global trade relations, reform immigration policies, and support businesses through tax reductions and deregulation.
Thus far, the president has made headway on some of these initiatives, particularly concerning tariffs. His administration has implemented increased tariffs on China, introduced reciprocal tariffs against other trading partners with policies he deems “unfair,” and has proposed a 25% tariff on imports of automobiles, semiconductors, and pharmaceuticals. These actions follow the imposition of 25% tariffs on steel and aluminum.
During the January gathering, officials expressed their concerns regarding the potential economic ramifications of these tariffs, along with policies associated with mass deportations, which are also central to Trump’s agenda. Both issues were noted as potentially disruptive to the ongoing disinflation efforts, according to the meeting minutes.
