TechFlow news, on December 13, according to Jinshi News, Dudley, former president of the New York Fed, wrote in a post that Fed Chair Powell will have to directly address the impact of Trump's policies on monetary policy at next week's meeting. The Federal Reserve considers four conditions necessary for policy changes: high likelihood of policy shifts, significant economic impact, clear policy content, and market expectations already forming. Based on this, the Fed may incorporate an extension of the 2017 tax cuts into its forecasts, but will temporarily exclude the uncertain effects of tariffs and immigration policies.
The updated Summary of Economic Projections (SEP) is expected to show: slightly stronger economic outlook for 2025–2026 compared to September, reflecting sustained economic momentum and higher productivity growth; the pace of rate cuts in 2025 may narrow to 50–75 basis points (previously expected at 100 basis points); the neutral interest rate could rise to 3% or higher, though still below futures market expectations; inflation is projected to return to the 2% target by 2026. Dudley emphasized that once Trump's tariff and immigration policies come into focus, the economic outlook could turn pessimistic.
