U.S. Fed Remains Inclined To Cut Rates, But Is In No Hurry

2025-02-12 03:55:00 ET

Summary

• Much was made of the lack of reference to the three “Big Ts” within the Fed’s Monetary Policy Report. Tariffs were mentioned twice, while President Trump nor the word “trade” featured at all.
• After 100bp of rate cuts, Fed Chair Powell suggests policy remains restrictive - even if inflation remains elevated, they will merely “maintain” policy restraint for longer.
• This indicates an inclination to cut rates closer to neutral, but no change is likely before June.

By James Knightley

Fed signals little prospect of any further rate cuts before summer

Much was made of the lack of reference to the three “Big Ts” within the Federal Reserve’s Monetary Policy Report published yesterday. Tariffs were mentioned twice, while President Trump nor the word “trade” featured at all. Well, all three failed to be worthy of inclusion in Fed Chair Jerome Powell’s testimony to the Senate Banking Committee. Instead, we get a rehash of the press conference following the Fed’s decision to leave rates on hold in January....

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