The probability of the Federal Reserve keeping interest rates unchanged in January is around 97%, according to the CME FedWatch Tool ahead of the central bank’s FOMC meeting this week. S&P Global Ratings Global Chief Economist Paul Gruenwald joins Catalysts anchors Seana Smith and Alexandra Canal to discuss his economic outlook. With services inflation “still sticky” and the US economy running “a bit hot,” Gruenwald expects the Fed to hold rates steady come this Wednesday. Gruenwald finds growth to still be running high as well and with the new Trump administration wanting to “juice things up a bit” for the economy, he finds that the Fed may only cut rates two times in 2025: “That’s our base case. But if we… get some stimulus into the economy and things start to pick up from the policy side, then… the next one may not be down. That’s not our baseline yet, but that that is kind of emerging into into view.” Additionally, Gruenwald highlights global discussions that happened at the annual World Economic Forum (WEF) in Davos, Switzerland last week — noting US economic dominance and the rise of AI — while businesses are adapting to the unpredictability of policy under Trump 2.0.
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