Monetary policy

A March 2025 survey by the National Association for Business Economics shows growing inflation concerns — and a diminishing chance of rate cuts — in 2025, but also optimism about avoiding a recession.

Notably, Trump described the January decision to hold rates steady – which looks set to be the Fed's stance for some time — as "the right thing to do."

The Federal Reserve's preferred inflation index showed little progress toward its target of 2%, increasing the likelihood of a prolonged rate pause.

The president's rough-and-tumble trade negotiations have throttled financial markets, causing investors to flock to the safety of dollars and Treasuries. But some economists say this style of policymaking could have hurt the U.S.'s safe haven status in the long run.

With the Federal Reserve touting a slower pace of easing, markets are expecting a longer pause. But Gov. Christopher Waller said the next interest rate reduction could come as soon as March because of inflation data.

Seen by many as a logical pick for the Federal Reserve's next vice chair for supervision, Gov. Michelle Bowman wants the institution to focus on safety and soundness issues, tailoring and transparency.

Analysts are unsure what the Federal Open Market Committee will do with monetary policy in 2025. The panel projects two rate cuts, but some analysts expect more, and others see fewer.

The Federal Reserve is poised to make several key decisions during the year ahead that will impact monetary policy both in the near term and for years to come.

The Federal Reserve lowered its policy rate but signaled a more "cautious" approach to future cuts in light of higher inflation expectations. Policy uncertainty was one of several contributing factors to that change in forecast.

Annualized inflation increased to 2.7% in November from 2.6% the previous month, providing further evidence that the economy remains strong despite restrictive monetary policy.