Expectations of the American interest rate today to evaluate Trump’s policies

The federal reserve faces complex problems before announcing his decision regarding the American interest today, Wednesday, in light of the increasing economic pressure on it.
While the bank’s president, Jerome Powell, seeks to achieve an accurate balance between controlling inflation and avoiding economic stagnation, the uncertainty remains the most prominent title for the next stage. The next weeks and months will be decisive in determining the course of the American economy, and the extent of the federal ability to maneuver amid these interlocking challenges.

American interest decision expectations

Federal Reserve officials are likely to keep interest rates unchanged during their meeting on Wednesday, to give themselves time to assess the impact of President Donald Trump’s policies on the economy, which faces continuous inflationary pressure and increasing growth on growth.

Although inflation witnessed an improvement last month, it is still high, and the new customs duties may lead it to rise again.
Also read: Central banks decide interest rates this week amid the anticipation of the markets
At the same time, the sharp cuts in government spending, in addition to the constant threats to impose customs duties, resulted in the decline in consumer and companies, which may be high on the American economy, and even contribute to high unemployment rates.

Risks of recession in America

Analysts warn that the economy may face inflationary stagnation, a scenario that is a complex challenge to the Federal Reserve, as monetary policy makers often resort to raising interest rates to combat inflation. But if this coincides with high unemployment rates, the federal may have to reduce interest rates again to stimulate growth and reduce borrowing costs.
Also read: The price of gold is up to rise above 3000 dollars amid the demand for safe haven

Is the American economy drowning during the Trump era?

So far, the image is still unclear about the possibility of the American economy entering an inflationary stagnation. However, the Federal Reserve faces an unprecedented state of economic uncertainty, similar to consumers and companies.

Even if the economy enters a moderate recession, the high unemployment rate of its current level of 4.1%, in addition to the continued inflation over the Federal Reserve of 2%, will put great pressure on decision makers at the Central Bank.

“We are facing a complex network of factors. On the one hand, there is stability of inflation, and on the other hand, we have to assess the impact of this on the labor market. If growth begins to decline, the matter will be more difficult,” said Esther George, the former head of the Federal Reserve Branch in Kansas City.

How many discounts are expected in the interest?

It is almost certain that federal reserve officials will keep the main interest rate without changing their meeting this week. With the conclusion of the meeting on Wednesday, they will issue their quarterly economic expectations, which are likely to indicate two expected reductions in the interest rate this year, the same scenario they expected last December.

Wall Street expects more discounts

On the other hand, Wall Street investors expect interest rates three times this year, in June, September and December, according to futures prices. Investors attribute this to the concerns of the economic slowdown, which may push the federal to more interest rates.

High American inflation expectations

One of the developments that may cause federal reserve is the big leap in inflation expectations according to the opinion of consumers conducted by the University of Michigan this month, which has shown the largest increase in long -term inflation expectations since 1993.

These expectations are important, because they may be self -fulfilled; If consumers and companies expect high costs, they may resort to measures that lead to the payment of inflation towards height, such as demanding increased wages, which may force companies to raise prices to compensate for the high costs of employment.

Are these concerns real?

Some economists warn that the Michigan University survey is still primarily, as it currently depends on only 400 answers. The final version, which will be published later this month, usually includes 800 answers, which may modify these estimates.

In addition, financial market standards have declined in recent weeks, based on bond prices.

Federal and inflation control policy

Increased inflation expectations represents an additional challenge for the central bank, especially since federal officials have been ready to gradually allow inflation to return to the goal of 2% by 2027, due to the decrease in inflationary expectations in general.

Will inflation rates rise again?

When President Trump imposed customs duties in 2018 and 2019 (during his first term), inflation did not increase significantly, due to the lack of comprehensive customs duties at the time, in addition to the presence of legal gaps that reduced the impact of some fees, such as those imposed on steel and aluminum.

But the current situation is different, as the American economy has gone through a severe inflationary period, which makes consumers more concerned about high prices, especially with the escalation of commercial tensions and the increase in customs duties.