The Federal Reserve's decision to trim interest rates for the third consecutive time, while signaling a slowdown in future cuts, has been overshadowed by looming concerns about Donald Trump's economic policies. Some Fed officials have already begun factoring in the potential impact of Trump's pledges to impose tariffs, reduce regulations, and cut taxes, which could lead to higher inflation, slower growth, and increased market volatility.
Donald Trump is still weeks away from taking the oath of office, but the president-elect’s vow to enact a sweeping policy overhaul is already looming large over the Federal Reserve . The Fed trimmed interest rates by a quarter of a percentage point on Wednesday in its third consecutive reduction, but officials’ projections for half as many rate cuts next year as they had forecast in September triggered big market swings.
This was most visible in the revised set of officials’ economic projections published by the central bank alongside the rate decision. Rather than a full percentage point worth of reductions for next year, which was forecast in September, most officials projected only half a point. They also scaled back their estimates for 2026 and 2027. Officials also sharply raised their median forecasts for inflation.
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