The Federal Reserve is expected to cut its benchmark rate by to around 4.3% when its latest policy meeting ends Wednesday but future rate cuts appear to be in jeopardy.
Economists forecasted that the central bank will continue cutting rates at least 2 or 3 times in 2025 but inflation remains above the Federal Reserve's targeted goal of 2%.
"We're on the cusp of a transition to them not cutting every meeting," David Wilcox, a former senior official of the Federal Reserve told the Associated Press.
Wilcox is an economist with Bloomberg Economics and the Peterson Institute for International Economics. "They're going to slow the tempo of cuts."
That means higher loan rates for mortgages, credit cards and car loans.
The Federal Reserve's cautious approach, led by Chairman Jerome Powell, may have to do with President-elect Donald Trump promising to enact policies such as raising tariffs on cars and merchandise, which economists argue will increase inflation.
Tara Sinclair, a former Treasury Department official and economist at George Washington University, said the uncertainty about Trump's policies will keep inflation elevated.
She told the Associated Press that the Federal Reserve may be trying to lower the rate to a "neutral" level with economists at a standstill of whether it's 3% or 3.5%.
In September, Powell spoke about cutting rates four times in 2025 as he announced the Fed cut the interest rate by half a point.
