Fed's Decision to Hold Rates Puts Spotlight on Balancing Trump’s Growth Plans and Inflation Concerns

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Fed's Decision to Hold Rates Puts Spotlight on Balancing Trump’s Growth Plans and Inflation Concerns

Bitget-RWA2025/11/12 18:28

By:Bitget-RWA

- The Fed may pause rate cuts in 2025, balancing Trump's policy risks against inflation and economic resilience. - JPMorgan's Karen Ward highlights uncertainty over Trump-era growth vs. inflation, contrasting Wall Street's rate-cut expectations. - Powell emphasizes "strong" economic performance as a reason to delay cuts, with CME FedWatch showing 58% chance of December 25-basis-point cut. - Regional Fed leaders like Bostic and Williams stress inflation risks and cautious reserve management amid leadership

The Federal Reserve is hinting at a possible halt to interest rate reductions as inflation worries persist, with leading officials and market analysts underscoring the fine line between economic strength and prudent policy decisions.

JPMorgan

Asset Management’s Karen Ward, a notable market commentator, remarked that following a rate cut in December, the Fed might pause throughout 2025 to observe how President-elect Donald Trump’s policies influence the economy. “The Fed is likely to lower rates once more, then potentially stay on hold next year,” Ward explained, highlighting the unpredictability of whether Trump’s plans will spur growth or stoke inflation, as noted in a

JPMorgan strategist report

. This perspective differs from the prevailing Wall Street outlook, which largely expects a series of rate cuts in the coming year.

Federal Reserve Chair Jerome Powell echoed this careful approach in a recent address, stressing that the robust U.S. economy eliminates any immediate need for rate reductions. “There are no clear signs from the economy that would prompt us to cut rates quickly,” Powell stated, adding that inflation must remain within target levels before any further moves, according to the same

JPMorgan strategist report

. His comments have moderated market forecasts, with the CME FedWatch Tool now indicating about a 58% chance of a 25-basis-point cut in December.

Regional Fed officials are also adopting a more hawkish tone. Atlanta Fed President Raphael Bostic, who recently announced he will retire in February, reaffirmed that inflation is the “most pressing and significant risk” to the Fed’s goals of price stability and employment, according to a

Reuters report

. Bostic, who will soon step back from voting on policy, argued that labor market data is “unclear” and does not warrant bold policy changes. Likewise, New York Fed President John Williams emphasized the importance of monitoring reserve balances as the central bank shifts from quantitative tightening to possibly restarting asset purchases. “We are approaching a point of sufficient reserves,” Williams noted, signaling a cautious stance on managing the Fed’s balance sheet, as reported in a

Seeking Alpha analysis

The Fed’s policy discussions are unfolding amid political and economic unpredictability. Trump’s proposed tariffs have sparked fears of rising inflation and possible friction with monetary policy. JPMorgan’s Chief Global Market Strategist David Kelly cautioned that “tensions between the Fed and the Trump administration could arise,” as tariffs may disrupt international supply chains and drive up domestic prices, according to the

JPMorgan strategist report

. At the same time, Bostic’s departure—and the potential for further changes in Fed leadership under Trump—has fueled debate over the central bank’s autonomy.

Market effects are already being felt. QCP analysts observed that Fed rate cuts combined with strong corporate profits could support risk assets and

Bitcoin

through the end of the year, even as short-term volatility persists due to government shutdown threats and weaker economic indicators, according to a

LookonChain analysis

. In the cryptocurrency sector,

Ethereum

whales have taken advantage of recent price declines, with institutional investors increasing their holdings as the market finds its footing, as reported by a

Yahoo Finance article

The Fed’s upcoming decisions will depend on whether inflation slows enough to warrant further easing. For now, policymakers are favoring a steady approach over rapid action, a stance that could influence economic and financial trends into 2026.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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