In Washington DC, the Federal Reserve building. © Reuters=News1 © News1 Reporter Park Hyung-ki,
(Seoul=News1) Reporter Park Hyung-ki = On the 8th (local time), as the Federal Reserve disclosed the minutes of the last Federal Open Market Committee (FOMC), it stated that inflation upward risks are heightened, suggesting it is time to delay rate cuts. This has led to projections that there might be no rate cuts this year.
Krishna Guha, vice chairman of the major Wall Street investment advisory firm Evercore ISI, sent a memo to clients on the same day stating, “The Fed may not proceed with rate cuts this year.”
He explained, “Stronger inflation data, a robust labor market, and President-elect Trump’s tariff threats increase the likelihood that the Fed won’t cut rates this year.”
In the previous FOMC, the Fed hinted at the possibility of two 0.25 percentage point rate cuts this year through its dot plot (interest rate schedule).
However, Evercore projected that tariff threats by Trump, among other factors, may drive inflation higher and potentially result in no rate cuts this year.
Previously, the Fed had indicated its cautious approach towards rate cuts, reflecting heightened concerns over inflation risks, based on the December FOMC minutes.
According to the December FOMC minutes, nearly all members assessed that Trump’s tariff policy has increased the upward risks to inflation, making it appropriate to delay rate cuts.
The minutes pointed out, “During the discussion of the monetary policy outlook, the committee reached a point where slowing the pace of policy easing is deemed appropriate.”