Monetary policy

The central bank wants to let Trump's policies play out across the economy before deciding which way to move interest rates, and it's too soon to know what the impacts will be, the Federal Reserve chair said.

Unemployment remained relatively stable amid declining consumer confidence and an emerging trade war, which have roiled markets.

Get expert analysis of the May FOMC meeting, inflation outlook, and Powell's comments.

With no policy changes expected, analysts are eagerly awaiting the new Summary of Economic Projections for clues about future monetary policy.

Federal Reserve Chair Jerome Powell emphasized the need for patience amid uncertainty over the Trump administration's policies, saying there would be no immediate rate changes but that the Fed would proceed carefully.

Mike Goosay, Chief Investment Officer of Global Fixed Income at Principal Asset Management, breaks down the Federal Open Market Committee meeting, Chair Powell's press conference and the SEP.

Muni yields were bumped one to eight basis points, depending on the scale, while UST yields fell three to 10 basis points, with the greatest gains out long.

"There are a lot of moving parts here with the potential to either help or hinder the Fed's quest for price stability and maximum employment" this year, noted BMO Deputy Chief Economist Michael Gregory, who says the Fed will "stand pat."

The Federal Open Market Committee cut the fed funds target again in December but signaled fewer cuts in 2025. There was some dissent. The markets are watching to see if the Federal Reserve pauses its easing cycle in January. Brian Rehling, head of global fixed-income strategy at Wells Fargo Investment Institute, recaps and parses the previous day's FOMC meeting and Fed Chair Jerome Powell's press conference.

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.

A week ahead of inauguration day, Scott Colbert, executive vice president, director of fixed income and chief economist at Commerce Trust, takes a look at how the Federal Reserve and the economy will fare in President-elect Donald Trump's second run in the White House.

Analysts are confident the Fed will lower rates at this week's meeting, but their views on what next year holds don't share the same consensus.

The Federal Reserve chair is not concerned about President-elect Trump nominating his successor well in advance of the end of his term in 2026, saying he is "confident" he will have a productive relationship with the next Treasury Secretary.

Federal Reserve Gov. Christopher Waller, a Trump appointee, said that while recent inflation readings are concerning, monetary policy would remain restrictive even if the central bank cuts interest rates by another quarter-point this month.

Donald Trump discussed various items related to the Fed and its independence and stated he would not nominate Jerome Powell for another term as chair. Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, discusses what a Trump presidency may mean for the Fed.

The Federal Reserve chair said there are no economic indicators calling for rapid rate cuts. He also addressed Fed independence, the impact of Trump's economic agenda and more.

In a speech, Federal Reserve Gov. Adriana Kugler said sound monetary policy comes when electoral politics are kept out of central banking.

The impact of both presidential candidates' fiscal promises around taxation and spending could have dramatic effects on the Federal Reserve's outlook for monetary policy, which has become more aggressive toward rooting out inflation.

While this meeting is a slam dunk, the election and data makes the December meeting more of a question, some analysts said.

The Federal Reserve began cutting rates in September. The December meeting is its last of 2024. Will the cutting continue, or will there be a pause? Doug Peta, Chief Strategist, U.S. Investment Strategy, at BCA Research, discusses the meeting and future policy.