US Fed to unveil first interest rate decision for 2025 tomorrow: Will Donald Trump impact the FOMC policy?
The US Federal Reserve will unveil its first monetary policy decision for 2025 on Wednesday, January 29, 2025. This will be the US central bank’s first policy verdict after Donald Trump took charge as the 47th US President on January 20. Wall Street anticipates policymakers will leave the federal fund interest rates unchanged until inflation progresses further toward their two per cent target.
Regarding the current US Fed interest rates, Trump has said that he seeks to lower interest rates by unleashing energy production and would speak to the US Federal Reserve if needed. “I’ll demand that interest rates drop immediately,” US President Trump told the World Economic Forum in Davos, Switzerland, in a virtual address.
The US Federal Reserve has a dual mandate to act independently and keep inflation and employment in check, primarily by raising and lowering short-term interest rates. Experts believe that under Donald Trump’s presidency, there has been a distinct shift in the dynamics between the administration and the US Federal Reserve.
His frequent public appeals for the US Fed to reduce interest rates, aiming to improve the economy’s growth rate, have been seen as unusual in their degree of political pressure on what is meant to be an independent institution.
Analysts noted that although the US Federal Reserve remained an independent institution, during this period, the political rhetoric amply reflected how sensitive the markets became to its moves, thereby revealing how fiscal and monetary policies can sometimes overlap each other closely.
“This dynamic betrayed the delicate balance between short-term political goals and the Fed’s mandates of fostering long-term economic stability. For observers, it reminded them that monetary policy does not operate in a vacuum but exists within a broader political and economic context, where external pressures can influence market expectations and, to some extent, policymaking priorities,” said Swapnil Aggarwal, Director, VSRK Capital