Federal Reserve's likely slowdown in rate cuts could disappoint borrowers
Just a few weeks ago, the path ahead for the Federal Reserve looked straightforward: With inflation cooling and the job market slowing, the Fed appeared on track to steadily cut interest rates
WASHINGTON — Just a few weeks ago, the path ahead for the Federal Reserve looked straightforward: With inflation cooling and the job market slowing, the Fed appeared on track to steadily cut interest rates.
In September, its officials predicted that they would reduce their benchmark rate four times next year, on top of three rate cuts this year.
Yet that outlook has swiftly changed. Several surprisingly strong economic reports, combined with President-elect Donald Trump's policy proposals, have led to a decidedly more cautious tone from the Fed that could mean fewer cuts and higher interest rates than had been expected.
Fewer rate cuts would likely mean continued high mortgage rates and other borrowing costs for consumers and businesses. Auto loans would remain expensive. Small businesses would still face high loan rates.
In a speech last week in Dallas, Chair Jerome Powell made clear that the Fed isn't necessarily inclined to cut rates each time it meets every six weeks.
“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
His comments were widely seen as signaling potentially fewer rate cuts in 2025, a view that sent stock prices falling after they had surged with Trump's election.
Trump has proposed higher tariffs on all imports as well as mass deportations of undocumented immigrants — steps that economists say would worsen inflation. The president-elect has also
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