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Posted on 05/07/2025 8:11:25 AM PDT by fireman15
The Federal Reserve is set to extend its pause on interest rate cuts on Wednesday amid concerns that President Trump’s tariffs will unleash fresh inflationary pressures while also hurting growth, a tricky combination that could lead to painful trade-offs for the central bank.
A decision to stand pat would keep interest rates at 4.25 percent to 4.5 percent, a level reached in December after a series of cuts in the second half of 2024.
Fed officials are in wait-and-see mode for now. They are closely tracking the incoming data for signs that consumer prices are rising again after a multiyear battle to keep them at bay, or that an otherwise solid labor market is starting to weaken. What they need is greater clarity on what, exactly, Mr. Trump has in store for the economy after a whirlwind of tariff announcements, government spending cuts and deportations.
The Fed will release its latest policy statement on Wednesday at 2 p.m. in Washington. Jerome H. Powell, the Fed chair, will hold a news conference right after.
Here is what to watch for on Wednesday.
Mr. Trump’s tariffs are widely expected to raise consumer prices, but the question is whether this will be a one-off increase or feed into a more persistent inflation problem. The answer will determine how carefully the Fed will proceed in terms of lowering interest rates.
At the last meeting in March, Mr. Powell told reporters that the Fed’s base case was for tariff-induced inflation to be “transitory,” reviving a term that gained notoriety after the Fed and other forecasters used it to initially describe price pressures during the pandemic. Those ended up causing the worst inflation spike in decades.
But that was before Mr. Trump shocked the world with far steeper tariffs than many had expected.
(Excerpt) Read more at nytimes.com ...
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I think they’re waiting for a president who isn’t named Trump.
Anything to slow Trump, the Times is for. Had Biden still been President (even in name only), the Times would critize the Feds for delaying,
Despite the talk of replacing the income tax with tariffs... the real goal is to level the playing field with our trading partners. Many are already responding in a positive way.
A democrat POTUS
Now, with inflation on the decline he's in no rush to lower. And nobody should forget it was this guy that artificially simulated the market during covid and is the reason everything costs more. He still has his job.
Here is a link that is very helpful if you want to read the article in its entirety:
https://dnyuz.com/2025/05/07/what-to-watch-at-the-federal-reserves-may-meeting/
I don’t know that this article is as biased as many Times articles.
Bingo
I am not sure that his job is very secure at this point. The Fed is used to handling certain types of challenges... I don't know that they have the ability to make the most appropriate decisions when the game is changed.
as opposed to a smooth ride to extinction
Powell doesn’t want to do anything that would help economy/Trump.
We are in complete agreement on that. Probably the only way to get our trading partners to give the US fairer access to their markets is to whack them on the rump with a big 2x4, which is what President Trump just did.
But as a person who grew up riding horses and chasing cows... sometimes they do not go in exactly the direction you want in the beginning. The start of this journey is not likely to be a smooth ride.
That is a given... but in the face of uncertainty they are likely to just try and ride this out and see where we end up. Stability is probably the best we can hope for from the Fed right now regardless of the motivation of Powell and Co.
One can go overboard on this stuff.
The Fed was flat at 5.3% from Sept 2023 to Aug 2024.
Inflation is at about 2.4%, which is 20% higher than the 2% target. It is also an aberration in that the month prior was 2.8% and 3% before that.
The huge import surge to get inventory before tariffs held inflation down (the 2.4 number vs 2.8). This quarter, the price rises are in place and will propagate, but the Fed cannot know how far.
Trump is likely right that balancing trade will have a long run powerful benefit, but for now the Fed would be on shaky ground cutting rates with a known inflation surge just weeks away.
“Had Biden still been President (even in name only), the Times would critize the Feds for delaying”
*************
Exactly right. The NYT is nothing but predictable Trump bashing, MAGA hating, left wing propaganda. Shame that so much of their garbage is posted on FR.
The interest rates are still historically low and should not be lowered anymore. Build the economy on reality and not crack.
I'm FED UP with the FED! How about you??
I thought by now the proles out here in FLYOVER COUNTRY would have caught on to this SCAM!
I'm FED UP with the FED! How about you??
I thought by now the proles out here in FLYOVER COUNTRY would have caught on to this SCAM!
I'm FED UP with the FED! How about you??
I thought by now the proles out here in FLYOVER COUNTRY would have caught on to this SCAM!
I get where you are coming from, and I enjoyed your graphics. But I blame nearly all of the issues that our economy is facing on the massive amount of debt that spend thrift politicians have created by greasing the palms of their deep state backers.
I don't blame my credit card companies when I spend too much money to pay off the statement balance when the payment is due.
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