United States Federal Reserve officials are maintaining a neutral policy stance amid strong economic performance, while seeking clearer direction from President Donald Trump’s incoming administration. Speaking at an event in California, Fed Governor Michelle W. Bowman suggested that more clarity on upcoming policies and inflationary pressures could emerge in the coming months. Kansas City Federal Reserve President Jeff Schmid also emphasized that with the current robust economic conditions and inflation above the 2% target, further rate cuts might not be necessary. He suggested that the economy may not require either restriction or additional support at this point.
Philadelphia Federal Reserve President Patrick Harker echoed this sentiment, suggesting a temporary pause in policy changes to assess unfolding economic circumstances, given the prevailing uncertainty. He cautioned against aggressive rate reductions, which could overstimulate demand and reignite inflationary pressures. Schmid reiterated that the Fed should wait for more clarity before making decisions that might impact economic activity, the labor market, and inflation.
The market has indicated a high probability that interest rates will remain unchanged at the Fed’s next meeting on January 29. However, Ryan Lee, chief analyst at Bitget Research, attributed a recent dip in Bitcoin’s price to $92,500 to strong US economic data, which might suggest potential interest rate hikes, making cryptocurrencies less attractive as investments.
In December, the Fed announced a 0.25% rate cut, a move supported by Bowman as the final step in the policy recalibration phase. This followed earlier cuts of 0.50% in September and 0.25% in November. Although the crypto market had expected the December decision, Federal Reserve Chair Jerome Powell’s indication that only two more rate cuts would occur in 2025 has raised concerns. Additionally, the Fed committee has revised its 2025 inflation outlook from 2.1% to 2.5%.
