Fed Chair Powell was asked if its appropriate for the Fed to cut rates AT ALL in 2025: His response: "There are cases in which it would be appropriate to cut rates, there are cases where it wouldn't." The Fed is NOT ruling out 0 interest rate cuts in 2025. https://x.com/KobeissiLetter/status/1920189597750800413
Powell has been crystal clear in saying that if tariffs were allowed to stay protractedly, the risk of higher inflation and slower growth would be high; now with such catalyst/driver being domestically determined and not external and hence within own control, why would you think Powell is keen to lower rates quicker to incentivise and embolden Trump to continue weaponising tariffs (to the detriment of its own economy)?
Powell will wait for a few months to see if inflation will creep up, and it almost certainly will, which means that he will stay the course or even signal hawkishness to tighten financial conditions. And markets believing 3 rate cuts in store this year is likely because of eroding economy would be left totally disappointed.
