The Fed will likely pause its rate cuts this week. After that, uncertainty over Trump's tariff, immigration plans make forecasting rates a dice roll.

Until then, Trump’s comments Thursday suggest he expects to regularly second-guess the Fed in public, despite a decades-long tradition among previous presidents of taking a hands-off approach to the central bank. Former president Joe Biden reappointed Powell, rather than replacing him, in a nod to central bank independence from politics.

Donald Trump’s return to the White House is overshadowing the Fed’s meeting this week, with policymakers expected to pause changes to interest rates for now.

At the Federal Reserve’s first meeting in 2025, consumers are going to want what Fed Chair Jerome Powell simply can’t give them: An answer to how much longer interest rates are going to stay high.

As mentioned, mortgage rates haven't fallen in line with the Fed's rate cuts because they depend on factors beyond the agency's benchmark rate, such as the economy and 10-year Treasury bond yields. For example, when the 10-year treasury rate goes up, mortgage rates tend to follow, and vice-versa.

Annual inflation ticked up for a third straight month in December as food, energy costs rose, CPI report showed. But underlying price measure eased.

The Fed’s challenge this week is how to pause and communicate a data-dependent approach to future cuts without drawing the ire of Trump, who has expressed his desire for rates to come down. “The goal will be to make as least amount of news as possible as they pause, which is well televised,” KPMG chief economist Diane Swonk said.

The Federal Reserve’s first policy meeting of Donald Trump’s second presidency will likely not include a rate cut. Against a backdrop of healthy demand and stubborn inflation, officials are widely expected to say on wednesday that they’re holding borrowing costs steady.