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    Jerome Powell and the Fed Head for Another Collision with Trump

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    Rates may not come down as much or as quickly as had been expected, just as Trump — a self-declared “low-rate guy” — returns to the White House.Inside the halls of the Federal Reserve’s headquarters overlooking Constitution Avenue in Washington D.C., casual mentions of the incoming Trump administration are cautious and infrequent. That’s by design.Donald J. Trump had a fraught relationship with the politically independent Fed during his first term. The president wanted central bankers to lower interest rates more aggressively and faster than they thought was economically appropriate. When officials refused to comply, he blasted them as “boneheads” and an “enemy.” He flirted with trying to fire Jerome H. Powell, the Fed chair. He tried (and failed) to appoint loyalists to central bank leadership roles.As the Fed enters a new Trump era with interest rates higher than they were at any point in his first term, tensions seem poised to escalate once again — and America’s central bank is on high alert.Fed analysts try to avoid casually discussing tariffs in email or Microsoft Teams meetings, wary that the information could become public and make the Fed look anti-Trump, according to one staff economist who spoke on the condition of anonymity to discuss the sensitive matter. Hallway chatter has taken a negative tone but is often studiously generic and apolitical, according to people familiar with the mood inside the building who also requested anonymity. And while Fed officials and economists have had to begin to consider what Mr. Trump’s promised policies might do to growth and inflation, they have avoided publicly speculating.Central bankers are, in effect, keeping their heads down to stay out of the limelight. But try as they might, they appear destined for another crash course with Mr. Trump.The president-elect promised “interest rates cuts the likes of which you have never seen before” while campaigning. Fed officials have been cutting rates since September and are on course to lower them further as inflation cools, but they are unlikely to reduce them as much as Mr. Trump is hoping.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Minutes Show Options Are Open on Interest Rate Cuts

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    Minutes from a Nov. 6-7 meeting showed that Federal Reserve policymakers favored lowering rates “gradually.”Minutes from the Federal Reserve’s November meeting offered little signal about whether officials would cut interest rates at their next gathering, though they suggested that policymakers did expect to continue to lower borrowing costs “gradually” over time.The account of the central bank’s Nov. 6-7 meeting, released on Tuesday, showed that Fed officials still planned to cut interest rates further. But with the job market holding up better than expected and the economy growing at a solid clip, they are in no rush to slash them rapidly.Fed officials thought it “would likely be appropriate to move gradually toward a more neutral stance of policy over time,” the minutes showed.At the moment, central bankers think that their policy rate — which is set to a range of 4.5 percent to 4.75 percent — is “restrictive,” which means it is high enough to weigh on growth.That’s by design. Policymakers lifted rates to high levels in 2022 and 2023 to make borrowing more expensive, hoping to cool the economy and wrestle rapid inflation under control. But over the past year, inflation has been slowing toward the Fed’s 2 percent goal, and the unemployment rate had begun to nudge higher.Given that, officials began to cut rates in September, then made a second rate cut in November. The goal was to ease off the economic brakes a little, allowing the economy to slow gently without risking a painful crash. When Fed officials last released economic forecasts, in September, policymakers expected to make one final quarter-point rate cut in 2024.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Trump’s Plans for Mass Deportations, Tariffs and Fed Could Affect the Economy

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    Predicting how White House policy is going to affect the American economy is always fraught with uncertainty. Donald J. Trump’s return to the White House has taken the doubt up a notch.Mr. Trump has proposed or hinted at a range of policies — including drastically higher tariffs, mass deportations, deregulation and a fraught relationship with the Federal Reserve as it sets interest rates — that could shape the economy in complex ways.“There are two multiplicative sources of uncertainty: One, of course, is what they’re going to do,” said Michael Feroli, the chief U.S. economist at J.P. Morgan. “The other is: Even if you know what they’re going to do, what is it going to mean for the economy?”What forecasters do know is that America’s economy is solid heading into 2025, with low unemployment, solid wage gains, gradually declining Federal Reserve interest rates, and inflation that has been slowly returning to a normal pace after years of rapid price increases. Factory construction took off under the Biden administration, and those facilities will be slowly opening their doors in the coming years.But what comes next for growth and for inflation is unclear — especially because when it comes to huge issues like whether or not to assert more control over the Federal Reserve, Mr. Trump is getting different advice from different people in his orbit. Here are some of the crucial wild cards.Tariffs: Likely Inflationary. How Much Is Unclear.If economists agree about one thing regarding Mr. Trump’s policies, it is that his tariff proposals could boost prices for consumers and lift inflation. But the range of estimates over how much is wide.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Chair Jerome Powell Says No Need to ‘Hurry’ to Cut Rates

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    A strong economy is giving Federal Reserve officials room to move “carefully” as they lower interest rates, the central bank chair said.Jerome H. Powell, the chair of the Federal Reserve, said that a solid economy with low unemployment, robust consumer spending and strengthening business investment gave the central bank room to take its time in cutting interest rates.“The economy is not sending any signals that we need to be in a hurry to lower rates,” Mr. Powell said during a speech in Dallas on Thursday. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”The Fed is trying to navigate a complicated moment. The economy remains healthy overall, but the job market has slowed over the past year. Inflation has also been cooling steadily. Between the two developments, central bankers have decided that they no longer need to tap the brakes on the economy quite so hard.After lifting interest rates sharply in 2022 and 2023 in a bid to cool the economy and wrestle rapid inflation back under control, they have begun to lower borrowing costs in recent months.But officials still want to make sure that they fully stamp out rapid inflation. Price increases have cooled substantially from their 2022 peak, but they have not completely returned to the central bank’s 2 percent goal. Prices climbed 2.1 percent in the year through September, and are on track to come in a bit above that in October, based on other recent data reports.Mr. Powell made it clear that Fed officials expected to see limited progress on inflation in the next few months.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Mortgage Rates Fell, Then Rose. What Comes Next?

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    Many would-be home buyers are still hoping for mortgage rates to come down as the Federal Reserve cuts interest rates. How much they will fall is unclear.Rafael Corrales, a real estate agent in Miami, recently showed houses to a young couple hoping to move from a rental into a home. They had been lured to the market after hearing that mortgage rates had come down.But when the couple went to get approved for a home loan, they found that the borrowing costs had ticked up once again.“They were very confused,” said Mr. Corrales, 49, an agent for Redfin. It pushed them back onto the sidelines of the housing market, and they’re now staying put in the hope that rates will fall again.Mortgage rates fell steadily from this spring through September, as economic data slowed and as investors began to expect a steady string of interest rate cuts from the Federal Reserve. But the rate on a 30-year mortgage has reversed course and climbed sharply over the past month to 6.79 percent nationally, from about 6.1 percent at the start of October.The move has come as a shock to some home buyers, who had waited many months for Fed officials to begin lowering borrowing costs, hoping that they would bring relief to the mortgage market.The logic was fairly simple. When the Fed lowers its benchmark interest rates, the downward shifts tend to trickle through financial markets to lower other interest rates. While the biggest impact is on short-term rates, the effect can extend to 10-year Treasury notes, which mortgages closely track. And the Fed is, in fact, adjusting policy. Officials cut interest rates for the first time in four years in September, and they followed with a quarter-point rate cut on Thursday.

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    U.S. average 30-year fixed-rate mortgage
    Source: Freddie MacBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What Trump’s Win Means for the Federal Reserve and Jerome Powell

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    Donald J. Trump spent his first presidency on a collision course with America’s central bank. Will it intensify?Donald J. Trump spent his first presidency attacking the Federal Reserve, pushing policymakers to cut interest rates and calling Fed officials names that ranged from “boneheads” to “enemy.”That rhetoric is likely to make a return to the White House with Mr. Trump. The Republican has been promising that interest rates will come down on his watch — even though rates are set by the politically independent Fed and the president has no direct control over them.The question looming over markets and the Fed itself is whether Mr. Trump will do more than just talk this time as he tries to get his way. The Fed is in the process of cutting rates, but it is unclear whether it will do so fast enough to please Mr. Trump.Congress granted the Fed independence from the White House so that central bankers would have the freedom to make policy decisions that brought near-term pain but long-term benefits. Higher rates are unpopular with consumers and with incumbent politicians, for instance, though they can leave the economy on a more sustainable path over time.But some in Wall Street and in political circles worry that the Fed’s insulation from politics could come under pressure in the years ahead. Here’s what that might look like.Trump Could Shake Up Fed PersonnelMr. Trump first elevated Jerome H. Powell, the Fed chair, to his current role in early 2018. He then quickly soured on Mr. Powell, who resisted his calls to sharply lower interest rates.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Here’s What to Watch as the Fed Meets Thursday

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    Federal Reserve officials are widely expected to cut rates by a quarter point, as uncertainty about a second Trump presidency looms large.Federal Reserve officials are widely expected to cut interest rates on Thursday. The bigger focus will center on what comes next for America’s central bank.Fed officials are cutting interest rates in response to months of slowing inflation. Policymakers lowered borrowing costs for the first time in four years in September, reducing them by half a percentage point. Officials projected two more smaller rate cuts in 2024 and a string of further reductions in 2025.But a combination of stronger recent economic data and President-elect Donald J. Trump’s return to the White House could muddle that outlook.The job market, which seemed wobbly when the Fed last met in September, has since stabilized. Consumer spending has remained strong, and overall growth looks solid. Those developments suggest that rates might not need to come down as much or as quickly in order to keep the economy steady.And if Mr. Trump follows through on his campaign promises, they could make it more difficult for the Fed to continue lowering interest rates as quickly. He has pledged a combination of tax cuts, tariffs and deportations that economists and Wall Street investors think could fuel inflation.“The main takeaway is that his election injects a higher degree of uncertainty into the outlook both for growth and for inflation,” said Blerina Uruci, chief U.S. economist at T. Rowe Price.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Russia Raises Interest Rate to 21 Percent, Its Highest in Decades

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    Military spending and recruitment are causing the country’s economy to overheat, leaving regulators in a struggle to rein in rising prices.Russia’s central bank raised the cost of borrowing in the country to its highest level in more than two decades on Friday in an effort to slow inflation that is being fueled by record military spending and recruitment.The central bank raised Russia’s benchmark interest rate to 21 percent during its regular monetary policy meeting. That makes borrowing in the country even more expensive than at the start of Russia’s invasion of Ukraine in February 2022, when the central bank sharply increased interest rates to calm the economy. The effective cost of borrowing in Russia is now the highest since 2003.It was the third increase in a row, and Elvira Nabiullina, the central bank’s president, said that interest rates could rise further later this year.“We don’t see inflationary pressures slowing down,” Ms. Nabiullina, who maintains some policy independence from the Kremlin, told reporters after announcing the new rate.The increase underscores the challenges that Ms. Nabiullina faces as she tries to cool inflation, which she forecasts will average 8.8 percent this year. At that level, prices are rising more than twice as quickly as the central bank considers healthy for the Russian economy.Ms. Nabiullina implicitly blamed Russia’s war in Ukraine for the continued price increases. She said the Kremlin’s decision to raise spending by $15.5 billion next year, mostly to cover war-related costs, was overheating the economy and feeding inflation.In particular, she said, high government spending blunts the central bank’s main tool for controlling inflation — setting interest rates. This is because companies that receive military contracts are willing to take out loans at any cost to meet production deadlines.Labor shortages resulting from military recruitment during the war have also fueled inflation.The war has left hundreds of thousands of Russian men dead or seriously injured, according to Western intelligence agencies. Hundreds of thousands more have left the country to avoid being called up. And hundreds of thousands of others have joined the army to benefit from ever-rising payouts, leaving the civilian economy deprived of workers.“Spare hands no longer exist in the economy,” Ms. Nabiullina said, which leaves companies competing for workers by offering them higher wages.In turn, those rising wages spur consumer spending, further contributing to inflation.Military spending has caused a boom in the Russian economy: The International Monetary Fund said this week that Russia’s economy would grow 3.6 percent this year, 0.4 percentage points higher than its previous forecast. But economists say that the situation is breaking the balance between supply and demand, with potential long-term consequences for the country’s financial stability.Yet the Kremlin is showing no signs of letting up on war spending.“Our main priority are the goals of the special military operation,” Finance Minister Anton Siluanov told RBC, a business newspaper, this week, referring to the war in Ukraine. “We will spend as much money as we need on the battlefield, on the victory.”Oleg Matsnev More