Scott Horsley

The U.S.

economy was the envy of the world in 2024, as The Economist magazine said.

Trump loves to say everything was terrible until I came in and then an enormous, wonderful renaissance happened.

There's just very little objective evidence to back that up.

I think you're understanding it correctly.

But we should say the Federal Reserve has been cutting interest rates.

They cut interest rates at each of their last three meetings.

They held rates steady for the first nine months of 2025, partly out of fear that President Trump's tariffs were going to rekindle inflation.

Now, the tariff impact on inflation has been

I think, more muted than a lot of people expected, although it has raised prices of some imported items.

But the reason that the Fed is not ready to cut interest rates more is because there's still inflation that's well above their target.

They're kind of caught between this tug of war, where on the one hand, they want lower interest rates because the job market has slowed down so much, but they also kind of want to keep rates elevated because prices are still going up faster than they'd like.

And that's the tension there.

Great to be with y'all.

Consumer prices in December were up 2.7 percent from a year ago, matching the annual increase of the previous month.

Prices rose three-tenths of a percent between November and December, led by rising costs for housing, food and energy.

Gasoline prices have fallen over the last year, but the cost of electricity and natural gas is way up.

Stubborn inflation is likely to make the Federal Reserve cautious about additional cuts to interest rates, despite pressure from President Trump.

On Sunday, Fed Chairman Jerome Powell said the Justice Department had launched an investigation of the central bank and suggested that's part of the administration's long-running pressure campaign to exert more control over interest rates.

Scott Horsley, NPR News, Washington.