According to ChainCatcher, Wall Street Journal reporter Nick Timiraos stated that the current interest rate policy of the Federal Reserve aims to maintain low and stable inflation rather than managing federal borrowing costs. The inflation rate is close to the Federal Reserve's target of 2%, but has not yet fully reached it.
Lowering interest rates too early could trigger inflation again, as economists expect rising import costs to lead businesses to raise prices. The Federal Reserve is concerned that the inflation rate may jump back to above 3% in a year.
An excessively long wait may lead to economic uncertainty and rising tariff costs, squeezing corporate profits and resulting in layoffs. The slowdown in the real estate market indicates that rising borrowing costs remain an economic headwind.
Middle Eastern conflicts may reverse the decline in energy prices, increasing the uncertainty of supply shocks and reinforcing the Federal Reserve's rationale for keeping interest rates unchanged.