Even with the economy subject to what may beRelated changesThe Federal Reserve is expected to indicate on Wednesday that it may reduce the main interest rate twice this year – the same predictionIssued in December.

However, the reasons for these cuts may change significantly, depending on how economics prices.

What was previously seen as “good news” discounts in response The economy is struggling In the aftermath of the extensive definitions, rapid discounts in government spending, and an increase in the event of economic uncertainty.

At the end of last year, the Federal Reserve reduced the main interest rate three times to about 4.3 % from 5.3 %. The Federal Reserve raised its average speed to combat inflation, and with low price growth, which allowed the Central Bank to unlike some of these price increases. In September, inflation decreasedTo 3/2 years lowFrom 2.4 %.

However, inflation then rose up for four consecutive months, before finally fell in February, to an annual rate of 2.8 %. Partially due to this reflection, President Jerome Powell stressed that the Federal Reserve Bank is in waiting and vision because it evaluates the impact of President Donald Trump’s policies on the economy.

To date, the feelings of the consumerShe fell sharplyThe Americans also worry that inflation will rise in the coming months. Small business ownersReporting unconfirmed economic expectations much moreWhich can cause them to reduce employment and investment.

Retail traders from both advanced and low -cost goodsI warnConsumers turn to increased caution because they expect prices to rise due to definitions. The retail sales increased modestly last month after a sharp decrease in January. House and contractors expect to build homes and their renovationsBe more expensive.

On Tuesday, the Federal Reserve stated that the manufacturing output jumped last month, driven by an increase in car production. Some of this could have reflected the higher automatic purchases by consumers looking to progress in the customs tariff. The construction of new homes also grew faster than expected.

Several economists have reduced their expectations for growth this year, with BarclaysAnd a bank, now expected to grow by only 0.7 %, a decrease from 2.5 % in 2024. Economists in Goldman Sachs will now expect inflation – with the exception of volatile food and energy categories – up to 3 % by the end of this year, an increase of its current level of 2.6 %.

Slower growth, if he pays unemployment as well, and the high federal reserve inflation will put in aVery difficult spot. Usually, when companies begin to cut workers, the Federal Reserve will reduce rates to stimulate more borrowing and spending and enhance the economy.

However, if inflation is higher than inflation, it wants to keep the rates high to slow down and curb inflation. When the Federal Reserve raises the main interest rate, it tends to pay other borrowing costs, including real estate loans, car loans, labor loans and credit cards.

Economists will closely see the press conference of Powell on Wednesday to see if it will indicate how to deal with the Federal Reserve such as this position.

But Powell is likely to be a double Powell in his recent efforts to confirm that the Federal Reserve can, at the present time, see the side lines.

“Caution costs are very low,” said Powell.Earlier this month. “The economy is fine, we don’t need to do anything, really.”

Christopher Waller, a member of the Federal Reserve Board of Directors, said earlier that the Federal Reserve can reduce interest rates this year, even if the customs tariff was imposed, as long as inflation was still decreasing once an effect is excluded.

However, earlier this month, in an interview with the Wall Street Journal, he admitted that the impact of the impact of tariffs on prices would be difficult.

“You are trying to find a sign of what is essential, and what is the noise of customs tariffs,” he said. “This is difficult.”

This story was originally shown on Fortune.com

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2025-03-19 09:18:00