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As is known, the FED has reduced interest rates for three consecutive months in the interest rate reduction cycle that started in September.
The Fed, which cut interest rates by 50 bp in September and 25 bp in November and December, left interest rates unchanged in January and paused the rate-cutting cycle.
While this raises the question of whether interest rate cuts are over, Richmond Fed President Thomas Barkin said in an interview that the Fed is still inclined to cut interest rates this year.
Speaking to Bloomberg, Barkin said that while the Fed left interest rates steady in January, it is still inclined to cut rates and that he sees no signs right now that the economy is overheating.
Barkin said he still thinks the policy rate is moderately restrictive, and added that the Fed needs more time to understand where the US economy and inflation are headed amid increasing uncertainty about President Donald Trump’s policies.
“It is difficult to know the impact of customs duties and what tariffs will come in the future.
The uncertainty extends beyond tariffs to immigration, regulations and other issues.
Many of Trump’s policies increase uncertainty in the economy.
I predict that consumer spending will increase and investments will decrease in 2025.
I expect the 12-month inflation figures to decline nicely.
I am in favor of interest rate cuts again this year.
It does not take any policy moves off the table, but rate hikes require the economy to overheat.
I see no signs that the US economy is overheating.
Prejudice is seeing what will happen and reacting accordingly.
I think the policy rate is still reasonably restrictive.
“We’ve recalibrated to a place that makes more sense given the current state of the economy.”
*This is not investment advice.
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