Fed's Cautious Path Amid Trump's Inflationary Policies

The U.S. Federal Reserve has lowered interest rates with caution due to high inflation, acknowledging the potential economic impact of President-elect Donald Trump's policies. Fed Chair Jerome Powell indicated uncertainty around further cuts, affecting markets and highlighting potential challenges for Trump in delivering lower consumer prices.

The U.S. Federal Reserve cut interest rates on Wednesday but signaled future reductions would depend on inflation trends. Fed Chair Jerome Powell emphasized caution about further cuts, influencing Wall Street dynamics and highlighting the economic changes expected under Trump's administration.

Powell noted improvements in inflation since 2022 but also pointed out areas where it has stagnated, particularly in shelter costs. He mentioned that the Fed is starting to factor in potential impacts of Trump's promises, including tariffs and tax changes, into its forecasts.

The Fed's updated projections anticipate fewer rate cuts due to expected inflation pressures from new policies. This has prompted analysts to foresee challenges for Trump's campaign promises, with Powell underlining the unpredictable nature of future tariffs and economic strategies.

(With inputs from agencies.)