Inflation in the U.S. saw a slight increase in November, with the consumer price index (CPI) rising to 2.7% annually, up from 2.6% in October. This change aligns with economists’ predictions but moves the inflation rate further from the Federal Reserve’s target of 2%. Despite this uptick, market expectations indicate a strong likelihood of a 25 basis point rate cut by the Fed at its upcoming meeting.
The Federal Reserve initiated its current rate-cutting cycle with a 50 basis point reduction in September, followed by a 25 basis point cut in November. Economic analysts believe the latest inflation data supports continued rate cuts, although they caution that the market’s pricing may be overly optimistic.
Federal Reserve Chair Jerome Powell emphasized a gradual approach to interest rate cuts, stating that monetary policy will adapt based on economic conditions. He indicated that if inflation does not move towards the 2% target, the Fed could slow its policy adjustments.
Federal Reserve Chair Jerome Powell said, “As the economy evolves, monetary policy will adjust in order to best promote our maximum employment and price stability goals. If the economy remains strong and inflation is not sustainably moving toward 2%, we can dial back policy restraint more slowly. If the labor market were to weaken unexpectedly, or inflation were to fall more quickly than anticipated, we can move more quickly.”
Trump has publicly stated that he does not plan to fire Powell, asserting that the chair is safe in his position. Their relationship has been contentious, particularly over interest rate hikes, but Trump believes he could manage the Federal Reserve better.
Trump stated, “I put a very good man in the Fed. I don’t necessarily agree with it, because he’s raising interest rates.”
Trump added, “I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.”
Trump said, “I think it’s the greatest job in government. You show up to the office once a month and you say, ‘Let’s see, flip a coin.’ And everybody talks about you like you’re a god.”
Powell said, “He’s right. The part about it being the greatest job, it might well be right. He’s partly right there, but he’s not right about the come to work, you know, once every month.”
