With the FOMC meeting approaching and facing pressure from Trump, the Federal Reserve is expected to keep the Interest Rate unchanged.

As the Federal Reserve prepares to hold its policy meeting this week on January 28-29, (FED) will confront the increased economic uncertainty caused by Trump's policies. While it is widely expected that the Fed will maintain the Intrerest Rate, the bigger question is how the institution will address challenges in an increasingly unstable political and economic environment.

The Trump administration is pressuring the Federal Reserve to cut interest rates.

President Trump openly demands the Federal Reserve to further lower borrowing costs. At the World Economic Forum held in Davos, Switzerland, Trump reiterated his stance: 'I will ask for an immediate reduction in the Interest Rate, and the whole world should do the same.'

This is not Trump's first time pressuring the Federal Reserve. During his first term, he repeatedly called on the Fed to take more aggressive interest rate cuts, but these calls had little impact on the Fed's decisions. However, this call comes with a series of potentially far-reaching economic policies by the Trump administration, including a harsh crackdown on immigration and threats to increase import taxes.

Policy uncertainty makes the Fed's response more challenging

Federal Reserve Chairman Jerome Powell and his colleagues are working to balance the uncertainty brought by Trump's new policies while maintaining the Fed's independence. Former Fed official Vincent Reinhart says that the Fed is currently in a precarious situation: 'You can't adjust monetary policy based on assumptions like the fact that there will be tariff or tax legislation by the end of the year. There are too many variables to consider now.'

Core Issue