Search
Home
/
News
/
Fed rate cuts may slow due to Trump's tariffs, with next year's rate potentially lower.

Fed rate cuts may slow due to Trump's tariffs, with next year's rate potentially lower.

TraderKnowsTraderKnows
11-13
SummaryFormer Federal Reserve official Mester states that Trump's tariff policy may limit the extent of interest rate cuts, leading the market to adopt a more cautious outlook.

Former Federal Reserve official Loretta Mester stated at the UBS Annual European Conference on Tuesday that if U.S. President Trump implements his global tariff policy, the Fed's rate cuts next year might be less than previously anticipated. Mester noted that the new Republican government's fiscal policy has significant implications for monetary policy, limiting the pace of rate cuts next year.

Since Trump won the election, market expectations for rate cuts have gradually decreased, with investors worried that the tariff policy could bring inflationary pressures. During his campaign, Trump promised to impose tariffs of 10% to 20% on imported goods and possibly 60% to 100% on Chinese products. Economists warn that these policies could exacerbate global inflation pressures, forcing the Fed to adjust the extent of rate cuts.

Currently, the market expects that the Fed will cut rates by 1 percentage point in the first half of 2025 and by an additional 25 basis points in the second half, with a possible rate cut of 25 basis points at the December 2024 meeting. This implies that by the end of 2025, the federal funds rate will range between 3% and 3.25%, slightly below the median forecast in the Fed's "dot plot."

Mester expects that the number of Fed rate cuts next year may be fewer than four, but she believes there could still be one cut at the December meeting. Additionally, she emphasized that the impact of the Trump administration's fiscal policy on monetary policy will become clearer once more details are announced early next year. Besides tariff policy, immigration, tax, and spending policies will also influence the U.S. economic outlook.

Meanwhile, global policymakers remain vigilant about the risks that Trump's fiscal policy could trigger. Olli Rehn, the Governor of the Bank of Finland and European Central Bank policymaker, warned that high import tariffs might have negative effects on the global economy and suggested that Europe prepare for potential trade conflicts to avoid repeating the scenario of trade frictions in 2018.

Business cooperation Skype ENG

Business cooperation Telegram Eng

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

The End

You Missed

Wiki

The Federal Reserve, or the Federal Reserve System, is the central banking system of the United States, established on December 23, 1913. The Federal Reserve is composed of the Federal Reserve Board, 12 regional Federal Reserve Banks, and their respective branches, with the aim of providing a safer, more flexible, and stable monetary and financial system for the country.

Organization

You Missed

Risk Warning

TraderKnows is a financial media platform, with information displayed coming from public networks or uploaded by users. TraderKnows does not endorse any trading platform or variety. We bear no responsibility for any trading disputes or losses arising from the use of this information. Please be aware that displayed information may be delayed, and users should independently verify it to ensure its accuracy.

Contact Us
Social Media
Region
Region
Contact