Donald Trump’s return to the White House is overshadowing the Fed’s meeting this week, with policymakers expected to pause changes to interest rates for now.

The Federal Reserve is nearly certain to keep its key interest rate unchanged at its policy meeting this week, just a few days after President Donald Trump said he would soon demand lower rates.

The US Federal Reserve’s (Fed) first meeting of 2025 this week stands to test the resurgence in US stocks as investors gauge the extent of more equity-friendly interest rate cuts in the months ahead

As mentioned, mortgage rates haven't fallen in line with the Fed's rate cuts because they depend on factors beyond the agency's benchmark rate, such as the economy and 10-year Treasury bond yields. For example, when the 10-year treasury rate goes up, mortgage rates tend to follow, and vice-versa.

Annual inflation ticked up for a third straight month in December as food, energy costs rose, CPI report showed. But underlying price measure eased.

The Fed’s challenge this week is how to pause and communicate a data-dependent approach to future cuts without drawing the ire of Trump, who has expressed his desire for rates to come down. “The goal will be to make as least amount of news as possible as they pause, which is well televised,” KPMG chief economist Diane Swonk said.

As a result, the Fed will be "super orthodox and choose inflation over employment," if push comes to shove, Papasavvas predicted. Dan Ivascyn, chief investment officer at bond gia