Interest rates have been cut once again by the Federal Reserve.
According to CNBC, the Board of Governors of the Federal Reserve System voted to lower interest rates to a range between 4.5% to 4.75%. It had previously lowered rates in March 2024, which had been the first time since 2020, as AFROTECH™ previously reported.
While this may seem like a hopeful sign, Federal Reserve Chair Jerome Powell shared mixed views about the economy. CNBC mentions Powell expressed “feeling good” about the economy, but also shared the following remarks during a press conference on Thursday, Nov. 7.
“The federal government’s fiscal path, fiscal policy, is on an unsustainable path,” Powell said. “The level of our debt relative to the economy is not unsuitable, the path is unsustainable. And we see that in a very large deficit, you’re at full employment [and] that’s expected to continue, so it’s important that be dealt with. It is ultimately a threat to the economy.”
Other economists are weighing in on the economy’s direction following Donald Trump’s re-election as president, with some believing it could slow the pace of future interest rate cuts. Trump has voiced his stance that the “president should have at least some say” on interest rates, suggesting potential shifts in monetary policy influence as his administration continues. This has sparked further debate among economists, who are now assessing the possible impacts of such influence on long-term economic stability and growth.
“The Fed is going to be even more important in 2025 than it is today, if you could possibly imagine that,” stated Mark Malek, Chief Investment Officer at Siebert Financial, in an email, as reported by Forbes.
“Among Trump’s economic plans is a tariff policy that will lead to an increase of 10% to 20% on imports and 60% to 100% on products shipped from China,” CNBC reports.
Bank of America’s senior U.S. economist believes the policy “could derail the Fed cutting cycle” for interest rates, noted CNBC.
Sharing a similar sentiment, JPMorgan Chase’s chief U.S. economist Michael Feroli, commented, “the various policy uncertainties may lead the Fed to move more slowly than it otherwise would.”
