The Federal Reserve has already issued a signal of suspension. Will it cut interest rates only once this year?

Top economists attending the American Economic Association (American Economic Association) annual conference in San Francisco last weekend expect that the Federal Reserve will switch to a wait-and-see position and may only cut interest rates once this year.

Ellen Zentner (Ellen Zentner), chief economist strategist at Morgan Stanley Wealth Management, said Federal Reserve Chairman Powell and his colleagues sent a “tough pause” signal at last month's meeting.

The Federal Reserve stated in its policy statement at the time that it would evaluate the economic situation and “consider the extent and timing of further adjustments (policies).”

Zeng Turner said the meaning of the phrase is, “If we have to do anything else, we'll let you know.”

“This is a tougher phrase than just talking about skipping a meeting,” she said.

Jason Furman (Jason Furman), a former senior economist in the Obama administration and a current professor at Harvard University, believes that if the labor market remains healthy, the Federal Reserve may only cut the benchmark interest rate once this year.

Forman said that the Federal Reserve has entered a new stage of “needing reasons” to cut interest rates.

He said that last year, the Federal Reserve thought “everything is fine, so you might as well cut interest rates.” But if the labor market remains healthy, given concerns about the outlook for inflation, and uncertainty about whether interest rates are already in the best position to slow demand, then cutting interest rates by 25 basis points this year is probably the most likely thing to happen.

However, Furman added that if the situation changes and the unemployment rate starts to rise, “the Federal Reserve will step in” and relax policy.

Zeng Turner agreed with this, saying that the Federal Reserve may “cut interest rates drastically” before the end of the year at that time.

On the other hand, Furman said that the possibility of a rate hike in 2025 cannot be ruled out.

He said that if the annual rate of inflation measured by the Federal Reserve's favorite personal consumption expenditure price index (PCE) rebounds above 3% in the middle of this year, the Federal Reserve may consider shifting the policy front. As of November last year, the overall PCE rate was 2.4% per annum.

Karen Dynan (Karen Dynan), a senior researcher at the Peterson Institute for International Economics (Peterson Institute for International Economics) and professor at Harvard University (Harvard University), predicts that the Federal Reserve will cut interest rates three times this year.

She said the Federal Reserve wants to cut interest rates slightly to prevent the economy from deteriorating.

Economists say they expect the US economy to continue to grow this year, but acknowledge that there are huge risks to this outlook, mainly due to the plans of the incoming Trump administration.

Dainan estimates that the chance that the economy will stay on track this year is about 75%.

She pointed out that the wealth effect brought about by the rise in the stock market last year and the increase in consumer and business confidence will boost the economy. “I'd say, given how stable it is now, the economy is likely to stay on track,” she said.

Forman said he expects the US economy to slow down this year, but not much, and the trend growth rate will drop to 1.5%-2%. Meanwhile, the US economy is expected to grow by more than 3% in the fourth quarter of last year.

“There are a lot of things that are moving in a worse direction,” Foreman said.

The consumer situation is not bad, he said, but their pressure is increasing as time goes on. He also doesn't expect much change in Trump's plans.