Tomorrow's message from the American central bank is the first under Donald Trump's new presidency. Trump has, just like during his previous presidency, already launched an attack on the Fed and emphasized what he wants to see from the central bank's side:
I demand immediate cuts, said Trump last week and added that he would "send a strong message" to the Fed and Fed Chairman Jerome Powell if they don't listen.
I think I know more about interest rates than they (Federal Reserve) do, he says.
From a market perspective, however, it's basically no one who believes in an interest rate cut from the current level of 4.25-4.50 percent. This is partly due to Donald Trump himself.
After having cut a total of one percentage point over the last four months of 2024, the Federal Reserve is now expected to take a pause, partly due to the uncertainty surrounding what will happen with Trump as president.
The inflation rate in the US risks rising, according to economists, as a consequence of Trump's policy, including threats of trade tariffs. Rising inflation means that interest rate cuts will have to wait from the central bank's side.
The Fed has simultaneously signaled that there will likely only be two cuts throughout 2025. This is hardly what Trump wants to see.
