There will be significant changes to the Fed's interest rate-setting committee in 2025, with two “hawks,” one “dove,” and one neutral member joining the Federal Open Market Committee (FOMC).
The transition comes at a time when inflation concerns are resurfacing, posing new challenges for policymakers guiding the U.S. economy.
The FOMC is scheduled to hold eight meetings throughout the year — in January, March, May, June, July, September, October and December — which will be crucial in determining the pace of future interest rate adjustments.
Last month, the Fed cut its benchmark policy rate by a quarter point and signaled only two more rate cuts through 2025. Fed Chairman Jerome Powell said the central bank was entering a new era and that future rate cuts would be more gradual and data-driven, depending on inflation trends.
“I think that’s a pretty strong message that a January rate cut is unlikely,” said Jan Hatzius, chief economist at Goldman Sachs. “Beyond that, the data will really have to drive that.”
Susan Collins (Boston), Alberto Musalem (St. Louis), Jeff Schmid (Kansas City), and Austan Goolsbee (Chicago) will join the FOMC as voting members, consisting of seven Federal Reserve chairmen, the president of the New York Federal Reserve, and the rotating chairmen of 11 regional Federal Reserve banks. While these new members will play a prominent role, non-voting officials will continue to actively contribute to policy deliberations.
The potential impact of President-elect Donald Trump’s policies further complicates the Fed’s decision-making process. Some economists say his proposed plans, which include higher tariffs, widespread deportations and tax cuts, could strain the labor market and raise inflation.
*This is not investment advice.
