BCGAME - Free 5BTC Daily Bonus!- Fed may cut rates more slowly under Trump.
- Trump's policies could boost economic growth.
- Future Fed adjustments will depend on policy implementation.
With Donald Trump's recent election victory in the United States, the path for future interest rate cuts by the Federal Reserve appears to be clearer. render slower and more cautious. The economic policies proposed by the Republican leader promise to revitalize the American economy, potentially affecting inflation and the speed of rate cuts.
U.S. central bankers are expected to cut the Fed's benchmark interest rate by 0,25% to between 4,50% and 4,75% after their policy meeting that ends today. However, financial markets are now pricing in just two rate cuts for 2025, forecasting a reduction to between 3,75% and 4%.
This less aggressive outlook for cuts is an adjustment in light of the robust economic data seen since the last meeting in September, which have gradually reset expectations for a less steep path of interest rate adjustments.
The outlook has changed significantly since Trump secured his reelection, defeating Democratic Vice President Kamala Harris. The president-elect promised during his campaign to revive the economy by implementing policies such as higher tariffs, tax cuts and a more restrictive immigration policy. Economists predict that these actions will accelerate economic growth and tighten the labor market, factors that, along with high import costs, could push up prices.
Several Wall Street economists on Wednesday predicted that the Fed will cut rates less frequently next year because of these risks. In addition, the impact of Trump’s policies could linger for years, although there is still uncertainty about whether he will fully deliver on his promises.
Analysts at Oxford Economics have said that given the delayed inflationary implications of tariffs and expansionary fiscal policy, the Fed could continue to cut interest rates through 2026. They note that this outlook could change as Trump's policies become clearer in the coming months.
