Fed's Cautious Approach: A Prelude to Economic Shifts

The U.S. Federal Reserve has cut interest rates, but Chair Jerome Powell indicated additional cuts depend on inflation progress. The policy change reflects anticipated economic shifts under Trump's presidency. Markets responded with reduced expectations of further cuts amid forecasts of prolonged high inflation and slow economic adjustment.

The Federal Reserve's recent decision to cut interest rates highlights a cautious approach reflected in Chair Jerome Powell's remarks. While the U.S. central bank lowered rates by a quarter percentage point, Powell emphasized the need for prudence regarding future reductions, contingent on inflation progress.

The announcement sent shockwaves through Wall Street, leading to declining stocks and reevaluated market predictions on future borrowing costs. Powell's acknowledgment of a 'new phase' under the incoming Trump Administration has prompted economic stakeholders to brace for impending shifts.

Fed officials revised projections, indicating limited rate cuts through 2025. With inflation persistently above target and uncertainty surrounding Trump's policies, policymakers remain vigilant. The Fed's gradualist stance underscores a strategic response to economic ambiguities on the horizon.

(With inputs from agencies.)