Investing.com -- Federal Reserve officials signalled caution about future interest rate cuts given significant economic uncertainty and potential inflationary pressures.
Boston Fed President Susan Collins highlighted the need for the central bank to move carefully, given the unclear outlook. "I view the current nature of uncertainty as calling for a gradual and patient approach to policymaking," she said.
Philadelphia Fed President Patrick Harker echoed Collins' concerns, reaffirming his expectation of rate cuts but warning that the policy trajectory is far from clear.
"Looking at everything before me now, I am not about to walk off this path or turn around," he said, adding that "the exact speed I continue to go along this path will be fully dependent upon the incoming data."
Financial markets are debating whether the Fed will cut rates at its next policy meeting later this month.
The uncertainty is amplified by the return of Donald Trump to the presidency, as his campaign promises of new tariffs and deportation measures could push inflation higher, complicating the Fed's goal of returning inflation to its 2% target.
The comments come after last month’s Fed decision to lower the benchmark overnight interest rate by 25 basis points to a range of 4.25%-4.50%. Policymakers also reduced their forecast for rate cuts in 2025, citing a challenging inflation outlook.
Harker’s remarks are his first since the December meeting, underscoring the balancing act the Fed faces as it tries to sustain economic growth while controlling inflation.