Fed minutes January 2025:

Federal Reserve officials in January agreed that they would need to see that inflation decreases more before further reducing interest rates, and expressed concern about the impact of the president Donald TrumpThe tariffs would have made that happen, according to the minutes of the meeting published on Wednesday.

The policy formulators in the Federal Open Market Committee unanimously decided in the meeting to maintain their key policy rate in constant after three consecutive cuts for a complete percentage point in 2024.

Upon reaching the decision, the members commented on the potential impacts of the new administration, including the talk on the rates, as well as the impact of the reduction of regulations and taxes. The Committee said that current policy is “significantly less restrictive” than it had been before the feat cuts, giving members time to evaluate the conditions before making additional movements.

The members said that current policy provides “time to evaluate the perspectives in evolution of economic activity, labor market and inflation, and the vast majority pointing to a still restrictive policy position. The participants indicated that the economy remained close to Maximum employment, they would like to see greater progress in inflation before making additional adjustments to the objective range for the federal funds rate. “

The authorities noticed concerns they had about the potential for changes in policies to maintain inflation above the objective of the Fed.

The president has already instituted some tariffs, but in recent days he has threatened to expand them.

In comments to journalists on Tuesday, Trump said he is looking for 25% duties on cars, pharmaceutical products and semiconductors that would accelerate throughout the year. Although it did not deepen too much in details, the tariffs would bring commercial policy to another level and represent more prices threats at a time when inflation has decreased, but it is still above the 2% objective of the Fed.

The members of the FOMC cited, according to the summary of the meeting, “the effects of potential changes on commercial and immigration policy, as well as the strong demand of consumers. Commercial contacts in several districts had indicated that companies would try to transmit to consumers greater costs of supplies that arise from possible tariffs. “

In addition, they noticed “upward risks for inflation perspectives. In particular, participants cited the possible effects of possible changes in commercial and immigration policy.”

From the meeting, most of the officials of the Central Bank have spoken in cautious tones about where the policy is directed from here. Most see the current level of rates in a position where their time can be taken when evaluating how to proceed.

In addition to the general approach, Fed officials make employment and inflation, Trump’s plans for fiscal and commercial policies have added a wrinkle to considerations.

On the other hand, concerns about tariffs and inflation, the minutes observed “substantial optimism on economic perspectives, derived in part of the expectation of flexibility in government regulations or changes in fiscal policies.”

Many economists expect tariffs that Trump plans to launch to aggravate inflation, although Fed policy formulators have said that their response would depend on whether they are unique increases or if they generate more underlying inflation than would require a political response.

Inflation indicators have been mixed lately, with consumer prices that increase more than expected in January, but wholesale prices indicating softest pipe pressures.

Fed chair Jerome Powell In general, he has avoided the speculation about the impact that the rates would have. However, other officials have expressed concern and admitted that Trump’s movements could affect politics, possibly delaying fees. The market price currently anticipates the next reduction that will arrive in July or September.

The reference loan rate of the Night Fed is currently directed between 4.25%-4.5%.