To be honest, the Fed is in an awkward situation when they make any monetary policy at this time around. Its dual mandates which are full employment and price stability catch the Fed in the middle.
After two years' big efforts, the Fed has made some progress in terms of fighting record high inflation which ever peaked in August 2022 by rate cuts. Core PCE which is the Fed preferred inflation measure is back to 2.7% and seemingly is moving toward 2% inflation target. But abruptly, since President Trump's inauguration, the outlook for inflation is changing significantly given the tariffs policy which will likely cause stagflation scenario down the road, which will further make the Fed's job to fight inflation more tough.
Since last rate cut, the Fed has been adopting wait-and-see mode to watch the economic evolving development closely, just because series of policies in terms of trade, immigration, fiscal policy and regulation advocated by Trump administration are creating much more uncertaines which will matter a lot for the economic outlook and the path of monetary policy.
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