The fed has a dual mandate. Job market is at historical high. Unemployment is at a level consistent with full employment. Wage are growing, slower, but growing.
Inflation is still above target, with a potential effect from tariffs that has still to materialise, given the most increase comes from services and housing markets.
The risk is to cut to soon, and when tariffs come into play, being forced to raise rates too violently.
Got your point. The key is for the Fed to maintain its traditional independence. This means working and making decisions based on data, not political pressure. Under current conditions, the most appropriate policy, in my opinion, is to hold interest rates longer, while waiting for evidence that inflation is truly approaching the target, rather than bowing to Trump's political pressure. Because the labor market is healthy, inflation remains above target, with the added risk of import tariffs. Therefore, urgent interest rate cuts are counterproductive and could trigger inflation, weaken the Fed's credibility, and ultimately lead to more drastic interest rate hikes in the future. Trump's policy is a short-term political calculation, but it has the potential to cause medium-term macroeconomic instability, as global investors are always watching to see whether the Fed is independent or merely a political tool for Trump.
So, going forward, let's see whether the classic recipe for inflation—high fiscal deficits + import tariffs + interest rate cuts—is realized, or whether energy stability, successful trade negotiations, and technological productivity will suppress prices.