Revised Interest Rate Cut Expectations for 2025 Amid Trump’s Victory and Inflation Concerns
The outlook for interest rate cuts in the United States for 2025 has undergone significant changes following Donald Trump’s recent victory in the presidential election. This comes alongside remarks from Federal Reserve Chair Jerome Powell, which have heightened concerns among major banks such as Barclays and Toronto-Dominion (TD) regarding inflation and future economic policies.
Content:
- Current Situation
- Impact of Trump’s Policies
- Revised Bank Expectations
- Jerome Powell’s Remarks
- Conclusion
Current Situation
The U.S. Federal Reserve recently lowered the overnight lending rate by a quarter-point, bringing it to a range between 4.5% and 4.75%.
Although the outlook previously anticipated continued cuts throughout 2025, many banks have reconsidered this direction following the election results.
Impact of Trump’s Policies
Both Barclays and Toronto-Dominion forecast that Trump’s new policies, which may include stricter immigration controls and higher tariffs, could lead to increased inflation.
These policies may prompt the Federal Reserve to slow down its interest rate cuts, directly impacting the country’s economic trajectory.
Revised Bank Expectations
Regarding 2025, TD Bank adjusted its forecast after Trump’s victory, predicting that the Federal Reserve will keep interest rates steady in the first half of the year before resuming cuts later.
Meanwhile, Barclays reduced its expectations for rate cuts from three times to twice, citing anticipated inflation increases and economic slowdown.
Jerome Powell’s Remarks
In his latest comments, Jerome Powell indicated that the Federal Reserve might proceed with greater caution to avoid rushing into decisions about when to stop lowering interest rates.
This statement led banks like Goldman Sachs to adjust their forecasts, now predicting additional quarter-point cuts through June 2025.
Conclusion
With expectations shifting after Trump’s win, the future of U.S. economic policies remains uncertain.
The Federal Reserve is expected to remain cautious in its interest rate decisions to mitigate potential negative effects on inflation and economic growth in the United States.
Revised Interest Rate Cut Expectations for 2025 Amid Trump’s Victory and Inflation Concerns