The Federal Reserve has made it clear that if policies from Trump’s new administration trigger inflationary pressures, it will slow down the pace of easing and may even raise rates. This suggests that the timing and extent of rate cuts will depend on the progress of these restrictive policies. However, as the impact of such policies on economic activity may lag, the Fed’s current hawkish stance could later shift to a dovish one. This situation mirrors 2018, when the Fed initially projected further rate hikes but eventually opted for cuts in response to slowing economic activity. At the December 18 FOMC meeting, the Fed delivered a 25-basis-point rate cut as expected but issued hawkish forward guidance. The dot plot now suggests only two rate cuts in 2025, down from the previous projection of four.