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Washington (AP) — Just a few weeks ago, the path ahead for the Federal Reserve looked straightforward: With inflation cooling and the job market slowing, the Fed appeared on track to steadily cut interest rates.

In September, its officials predicted that they would reduce their benchmark rate four times next year, on top of three rate cuts this year.

Yet that outlook has swiftly changed.

Several surprisingly strong economic reports, combined with President-elect Donald Trump’s policy proposals, have led to a decidedly more cautious tone from the Fed that could mean fewer cuts and higher interest rates than had been expected.

Fewer rate cuts would likely mean continued high mortgage rates and other borrowing costs for consumers and businesses. Auto loans would remain expensive. Small businesses would still face high loan rates.

In a speech last week in Dallas, Chair Jerome Powell made clear that the Fed isn’t necessarily inclined to cut rates each time it meets every six weeks. “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

His comments were widely seen as signaling potentially fewer rate cuts in 2025, a view that sent stock prices falling after they had surged with Trump’s election.

Trump has proposed higher tariffs on all imports as well as mass deportations of undocumented immigrants — steps that economists say would worsen inflation. The president-elect has also proposed a menu of tax cuts and deregulation, which might help spur economic growth but would also fan inflation if businesses couldn’t find enough workers to meet increased consumer demand.

And recent economic data suggests that inflation pressures could prove more persistent and economic growth more resilient than was thought just a few months ago. At his most recent news conference, Powell suggested that the economy could even accelerate in 2025.

Wall Street traders and some economists now envision just two, rather than four, rate cuts next year. And while the Fed will likely cut its key rate when it meets in mid-December, traders foresee a nearly even likelihood that the central bank could leave the rate unchanged. “I absolutely would anticipate that they’ll ease up on the pace of cuts,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors. “The potential for growth to remain strong — that has to call into question whether they will feel either the need or ability to cut rates at the pace they had previously forecast.”

Economists at Bank of America expect annual inflation to remain “stuck” above 2.5%, higher than the Fed’s 2% target level, in part given the likelihood that Trump’s economic proposals, if carried out, would fuel price pressures. The economists now foresee just three rate reductions in the coming months, in December, March and June. And they expect the Fed to stop easing credit once its benchmark rate, now at 4.6%, reaches 3.9%.

Krishna Guha, an analyst at investment bank Evercore ISI, wrote last week that, “We think the looming Trump presidency is helping to drive a change in tone from the Fed — including Powell — towards a warier and more hedged posture on the pace and extent of further cuts.”

Trump has vowed to impose a 60% tariff on all Chinese goods and a “universal’’ tariff of 10% or 20% on everything else that enters the United States. On Wednesday, a top executive at Walmart, the world’s largest retailer, warned that Trump’s tariff proposals could force the company to raise prices on imported goods.

“Tariffs will be inflationary for customers,” John David Rainey, Walmart’s chief financial officer, told The Associated Press. Other consumer goods and retail companies, including Lowe’s, Stanley Black & Decker, and Columbia Sportswear, have issued similar warnings.