The Globe and Mail reports in its Thursday, Jan. 9, edition that U.S. Federal Reserve officials at their Dec. 17-18 meeting decided to cut the key interest rate by a quarter point to 4.3 per cent, amid ongoing inflation concerns and potential tariff threats. An Associated Press dispatch to The Globe reports that minutes from the meeting revealed divisions among the 19 policy-makers, with some supporting no rate change. Economists suggest that the Fed will likely skip a rate cut at its January meeting after reducing rates for three consecutive sessions.
Fewer rate cuts will likely keep borrowing costs elevated for consumers and businesses this year. Policy-makers indicated the Fed is close to slowing its policy easing, projecting only two cuts next year instead of the previously expected four. The Fed's staff economists found the economy's future path particularly uncertain at the December meeting, largely due to the potential changes in trade, immigration, fiscal and regulatory policies under the incoming Trump administration. Economists at Goldman Sachs have estimated Mr. Trump's tariff proposals could push inflation up by nearly a half-percentage point later this year.
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