Normies (read: everyone but CFO Brew readers) might be concerned with different upcoming events than us nerds over here. Will Beyoncé finally get AOTY at the Grammys? Can the Chiefs win another Super Bowl?
Around here, the biggest national event coming up is, of course, the Fed’s January meeting. Aren’t you just on the edge of your seat thinking about it?
But really. The Fed’s inflation fight has been the saga to watch since 2022, when inflation hit a 40-year high of 9.1%. That journey was coming to an end—before a new set of economic obstacles, particularly in the form of President Trump’s proposed tariff plans, entered the picture.
Back in December 2024, when the Federal Reserve cut interest rates for a third consecutive meeting, Jerome Powell noted that December’s cut was “a closer call.” The real news out of that meeting, though, was the Fed’s updated forecast with respect to how many times it’d cut rates in 2025. Whereas the Fed once predicted four cuts this year, it trimmed its forecast to just two.
“As for additional cuts, we’re going to be looking for further progress on inflation as well as continued strength in the labor market, and as long as the economy and the labor market are solid, we can be cautious…as we consider further cuts,” Powell said at a post-meeting press conference at the time.
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So, now that 2025 is here, what are people saying about the possibility of rate cuts at Wednesday’s meeting?
“The Federal Reserve is likely to maintain the federal funds rate unchanged at 4.25%–4.50% at the FOMC meeting,” EY chief economist Gregory Daco told CFO Brew via email.
“The unanimous decision should come as no surprise given the December rate cut decision was a much closer call than prior ones with most participants noting their decision was ‘finely balanced’ and some even stressing the merit of keeping the fed funds rate unchanged,” he continued.
Meanwhile, Bank of America analyst Mark Cabana wrote in a memo that the Fed’s January meeting could be viewed “as mostly a placeholder,” per Reuters.
“Between the December meeting and the March meeting, it did provide enough calendar room to see three full cycles of monthly economic data, particularly on the inflation front,” Greg McBride, chief financial analyst at Bankrate, said. “But unless there’s a rapid reversal in the next two months, a March rate cut seems unlikely.”