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Federal Reserve Faces Growing Pressure for Emergency Rate Cut Before May Meeting
Despite market pressure, the Federal Reserve is not rushing to adjust monetary policy in response to President Trump’s recent tariff announcements. Speaking last Friday, Fed Chair Jerome Powell signaled that the central bank is taking a cautious approach, stating that “it feels like we don’t need to be in a hurry.” This stance suggests that the Fed will not take emergency action before its May meeting.
Powell’s comments were starkly different from his previous assessments of the impact of tariffs on inflation. The Fed Chair initially suggested that the effects would be transitory, but now seems more concerned about the potential long-term implications. “It feels like we have time,” Powell said, implying that there is no pressing need for immediate action.
The central bank faces a challenging decision. On one hand, it must combat rising inflation caused by tariffs. However, on the other hand, it needs to support the job market and prevent recession. The prospect of tariffs driving up prices will likely make the Fed more hesitant to ease monetary policy aggressively.
Powell’s tone has shifted significantly in response to Trump’s actions. Previously, he had hinted that emergency measures might be needed if economic conditions worsened. However, his recent comments suggest a more cautious approach.
Market participants are increasingly betting on aggressive rate cuts, with a 34% chance of a reduction at the May meeting and over 98% probability of an adjustment in June, as per the CME FedWatch Tool. Traders also believe that the Fed will make changes in November and December 2025, reflecting their expectations of ongoing economic challenges throughout the year.
Despite concerns about emergency measures potentially backfiring, market pressure continues to build for action. Experts caution that an emergency rate cut could have unintended consequences, such as fueling further panic or failing to address the root causes of inflation.
Source: https://coincentral.com/federal-reserve-faces-growing-pressure-for-emergency-rate-cut-before-may-meeting/
