Between economic slowdown and inflation, the US faces an impasse over interest rates.

247 - The agency Bloomberg It was reported this Sunday (14) that the Federal Reserve (Fed), the central bank of the United States, should announce this week the first interest rate cut of the year, but without consensus on the pace of monetary easing. The decision comes amid growing pressure from US President Donald Trump, who seeks greater influence over monetary policy.

The measure scheduled for Wednesday (17) does not guarantee a continuous trajectory of cuts. The scenario is marked by weak labor market data, an increase in unemployment insurance claims and revisions that indicate much less robust job growth in 2024 and 2025. At the same time, inflation remains above the Fed's 2% target, pressured by tariffs imposed by the Trump administration on trading partners.

Disagreements among Fed officials

The expectation of a 0,25 percentage point reduction in interest rates has divided officials at the institution. Some advocate a more aggressive stance to stimulate the economy, while others believe that inflation remains a significant risk. If three or four dissenting opinions are confirmed at the meeting, it would be the first time since 2019—or even 1990—that a Fed meeting has seen such a high level of disagreement.

Pat Harker, former president of the Federal Reserve Bank of Philadelphia, pointed out that it is unclear whether this cut will mark the beginning of a robust easing cycle. "It's not obvious that this is going to happen here consistently," he said.

Employment, immigration and tariffs

Federal Reserve Chairman Jerome Powell acknowledged what he called "a curious kind of equilibrium" in the labor market: while demand for labor slows, supply also shrinks due to Trump's restrictive immigration policies. This combination makes it more difficult to assess the true fragility of employment.

Vincent Reinhart, chief economist at BNY Investments, stated: "I see weakness in the employment data that they need to address," although he believes there is no need for a rapid series of cuts.

Marc Giannoni, chief economist at Barclays Capital, highlighted the difficulty the institution faces in simultaneously dealing with the impacts of the trade war and immigration policy. "The trade shock and the immigration shock are two factors that make it very difficult to manage the Fed's dual objectives," he noted.

Political pressure and council composition

Donald Trump has intensified his offensive against the central bank. Last month, he attempted to remove Governor Lisa Cook, a move temporarily blocked by the courts, and nominated Stephen Miran, a close ally, to the Board of Governors. If approved by the Senate, Miran could vote as early as this week's meeting.

The presidential offensive also includes the possibility of appointing a new Fed chairman in May, when Jerome Powell's term expires. Among the names being considered is Christopher Waller, the current governor and one of Trump's preferred candidates to lead the institution.

Projections and perspectives

Barclays analysts project that the Fed will cut interest rates at the three remaining meetings in 2025, in addition to two reductions planned for 2026. Wells Fargo, in turn, is betting on a gradual improvement in the scenario, provided that rates are stabilized and the effects of government tax cuts begin to boost families and businesses.

Among the regional Fed governors, opinions remain divided. While Raphael Bostic (Atlanta) considers only a rate cut in 2025 appropriate, Jeff Schmid (Kansas City) has spoken out against any reduction at this time. Alberto Musalem (St. Louis) advocated for "a balanced approach," without leaning exclusively towards combating inflation or stimulating employment.

Esther George, former president of the Kansas City Fed, summed up the challenge: “The question is whether they really want to stimulate demand or whether they believe that policy is excessively tight and simply needs to be calibrated to something more normal.”