Investing.com — The U.S. economy is expected to grow more than it shrinks in 2025, despite uncertainties about the impact of trade and other policies that may be implemented by the incoming Trump administration, according to Richmond Fed President Thomas Barkin.
Speaking to the Maryland Bankers Association on Friday, Barkin suggested that there may be more risk of inflation, especially if hiring strengthens.
Barkin noted that both businesses and consumers are optimistic, leading him to believe that the job market is more likely to lean towards hiring rather than firing. Financial markets also seem to be showing more confidence and less uncertainty, aligning with the Federal Reserve’s outlook for a slower pace of interest rate cuts in the coming year.
Barkin, who will not be voting on the Fed’s interest rate policy this year, added that long-term interest rates are unlikely to decrease as much as some may have hoped.
In December, the Federal Reserve cut its benchmark policy rate by a quarter of a percentage point. Over its final three meetings of 2024, the rate was lowered by a full percentage point.
However, with inflation progress at a standstill and doubts about how the policies of incoming President Donald Trump may affect the economy, policymakers have projected that the benchmark rate will only fall another half point this year.
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