EDITOR’S NOTE: MJV Craft is an opinion newsletter generated by AI that covers everything from politics to business and finance. This edition is the first of many weekly newsletters that focuses on major federal realignments—and what they mean for institutions, voters, and markets.

How many rate cuts will there be in 2025?

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What’s happening today?

It’s no secret that the American people are suffering under the iron fist of inflation. Whether it’s Biden’s COVID stimulus, supply chain backlog or Putin’s war in Ukraine, the toll on consumers is evident. 

Today, we have two GenAI opinions from experts: Raphael Bostic, President of the Reserve Bank of Atlanta, and Mary Daly, CEO of the Federal Reserve Bank of San Francisco. Bostic believes that only one rate cut will happen this year, Daly believes that two are more likely. Below is an explanation of these realities and how they contrast. 

ChatGPT → SOURCE | CHAT WITH AI RAPHAEL: 

Q: Hi Raphael Bostic ChatGPT! You have stated that you only expect one fed rate cut this year. Could you explain why you believe this, and elaborate on how c-suite executives believe that consumers can push through the Trump administration’s tariffs? 

A: Why only one rate cut this year?

My position has been grounded in the data. Inflation has come down meaningfully from its peak, but progress has been gradual—and recently, a bit sticky. The labor market remains strong, with unemployment low and wage growth moderating, but not collapsing. This tells us that the economy isn’t in need of aggressive stimulus. Instead, we’re in watchful-wait mode: looking for sustained evidence that inflation is on a path toward 2% without reigniting pressures by moving too fast.

One cut later this year would serve as an insurance policy if inflation continues trending down and growth shows signs of cooling, but multiple cuts might be premature and risk reaccelerating inflation. So it's a cautious, data-dependent posture—not hawkish, not dovish, just deliberate.

Now, on tariffs and consumer resilience under a potential Trump administration

From my conversations with C-suite executives, here's what I'm hearing:

• Consumers are still spending, even amid elevated prices. Executives believe there's a "psychological normalization" going on—people expect higher prices and are adjusting behavior rather than pulling back entirely.
  

• In sectors like retail, food, and logistics, executives anticipate brand loyalty and convenience will help them pass through modest price increases tied to tariffs.
  

• Some CFOs are planning pre-emptive supply chain shifts or absorbing short-term margin hits to avoid sticker shock on the consumer end.
  

• There’s also a belief that tariffs will be selective—targeting politically relevant sectors, which they think they can manage with pricing strategy or by leaning on domestic sentiment ("Buy American").

That said, no one’s pretending it's painless. Boardrooms are modeling out scenario-based risk, with contingency planning tied to election outcomes. But broadly, there’s a bet on consumer stamina, aided by a still-strong labor market and cooling inflation.

ChatGPT → SOURCE | CHAT WITH AI MARY: 

Q: Hi Mary Daly ChatGPT! You’ve indicated that two Fed rate cuts this year remain a "reasonable" projection. Could you elaborate on why you’re sticking with this outlook despite uncertainties around tariffs, and how do you think businesses’ strategies to adapt to these tariff costs might influence consumer resilience under the Trump administration’s policies?

A: Thanks for the thoughtful question. Yes, two rate cuts this year remain a reasonable projection, even with the evolving uncertainty around tariffs. Here's why.

The Federal Reserve’s mandate is centered on price stability and maximum employment. We’ve seen inflation gradually moving closer to our 2% target, and the labor market remains strong. But there are headwinds, particularly from global developments—tariffs being a key one.

Tariffs create a layer of uncertainty for businesses. They increase input costs and can delay investment decisions. But what we’re seeing is that many firms are adjusting—whether by diversifying supply chains, finding cost efficiencies, or passing on a portion of those costs to consumers. That adaptability is crucial.

Now, the extent to which businesses can absorb or reroute these costs will directly influence consumer prices. If consumers continue to feel confident—and we see that in strong spending data—then resilience remains intact. But if tariff costs spill over too strongly into consumer prices, that could weigh on real wages and dampen demand.

So, the path of monetary policy isn’t on autopilot. It’s about being data-dependent and attuned to how these risks unfold. Two cuts seem reasonable right now because they give us room to support the economy without overheating it, while also acting as insurance against downside risks—like prolonged trade tensions or weaker global growth.

_{Grok → SOURCE | CHAT WITH AI RAPHAEL:} 

Q: Hi Raphael Bostic Grok! You have stated that you only expect one fed rate cut this year. Could you explain why you believe this, and elaborate on how c-suite executives believe that consumers can push through the Trump administration’s tariffs? 

A: Why Only One Rate Cut in 2025?

My shift from expecting two quarter-point rate cuts to just one stems from a cautious assessment of the economic landscape, particularly the inflationary pressures tied to the Trump administration’s tariff policies. As of late March 2025, I’ve noted that inflation isn’t declining as smoothly or swiftly as I’d hoped toward the Fed’s 2% target. The most recent data shows annual inflation at 2.8% in February 2025—still above target—and I suspect it’ll remain "bumpy" rather than trending decisively downward. This stickiness is largely due to tariffs, which are acting as a headwind to disinflation.

Historically, tariffs have triggered one-time price spikes that eventually dissipate. But this time feels different. We’ve just emerged from a period of elevated inflation—peaking in 2022—and consumers are still reeling from that experience. Another round of price increases from tariffs could hit harder than usual, potentially shifting inflation expectations among households and businesses. If people start assuming prices will keep rising, that could embed itself into wage demands and pricing strategies, making it tougher for the Fed to guide inflation back to 2%. I now project that target might not be hit until early 2027—later than the Fed’s earlier 2026 estimate.

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