Federal Reserve’s first meeting of 2025: Fed expected to keep interest rates steady despite pressure from Donald Trump
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Why is Trump demanding lower interest rates?
During his virtual speech at the World Economic Forum, Trump said, «With oil prices going down, I'll demand that interest rates drop immediately.» However, the U.S. is not part of OPEC, the group of oil-producing nations that controls oil prices. Moreover, the Federal Reserve, an independent entity, is not influenced by direct political intervention, and its decisions are based on economic data, not on demands from elected officials.
This isn't the first time Trump has pushed for lower interest rates. During his first term, he frequently advocated for rate cuts, claiming that it would boost economic growth. However, Fed Chair Jerome Powell has maintained the central bank’s independence, stating last November that he would not step down if Trump asked him to resign.
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Why is Fed cautious about lowering interest rates?
The Fed has been closely monitoring inflation, which, although down from its peak of 9% in June 2022, remains above its target rate of 2%. In response to inflation, the central bank implemented three consecutive rate cuts in the final months of 2024, bringing the federal funds rate down by a percentage point. Despite this, inflationary pressures
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