Federal Reserve officials remain cautious ahead of Donald Trump’s inauguration
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Johny Smith
2025/01/14
3 mins read
Representatives of the US Federal System prefer to maintain a neutral political position, awaiting clear instructions from the administration of the new President Donald Trump. According to Fed Board of Governors member Michelle Bowman, the coming months may bring clarity to the policy of the new presidential administration, and a local transfer of inflationary pressure, which was observed in the first half of last year, is also expected.
In turn, Kansas City Fed Chairman Jeff Schmidt noted that an aggressive reduction in the key refinancing rate may not be necessary. This is due to the consistently high performance of the national economy, as well as keeping inflation above the target of 2%. “I believe that we are at a stage where the national economy does not require restrictions or support. The Fed’s policy must remain neutral!” the official emphasized.
Michelle Bowman shares a similar point of view. She believes that the American regulator should make any changes to monetary policy with caution and a comprehensive assessment. For his part, the head of the Fed from Philadelphia, Patrick Harker, noted that the agency needs to take a certain pause to understand how inflation dynamics will develop.
“I’m not talking about a long-term pause. However, we need to assess what dynamics will be observed, since for now the situation can be called uncertain,” the official emphasized. A number of Fed officials also noted that aggressive easing of monetary policy carries the risk of overstimulating demand.
In the absence of consensus on the proposal, this situation could provoke an acceleration of the inflationary spiral. Against the backdrop of such rhetoric, many experts are inclined to believe that following the Fed meeting on January 29, the key rate will remain unchanged.
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