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The Federal Reserve is set to take a more cautious approach to interest rate cuts on fears that the Trump administration’s policies will stoke higher inflation, according to academic economists polled by the Financial Times. 

The economists, who were surveyed between December 11 and 13, moved up their forecasts for the federal funds rate next year compared to the previous FT-Chicago Booth poll in September. The vast majority thought it would hover at 3.5 per cent or higher by the end of 2025, whereas most respondents in September said it would probably fall below 3.5 per cent by that point.

If the Fed follows through with a quarter-point cut at its meeting next week as expected the policy rate will stand at 4.25-4.5 per cent.

“Over the last few months, the downside risks to the labour market have become a little less bad and progress on inflation seems to have stalled a bit,” said Jonathan Wright, a former Fed economist now at Johns Hopkins University, who helped to design the survey.

“Inflation has come down more painlessly than I and most people had expected, but I think we may still be seeing that the last bit [getting to target] will be a little harder, and so that certainly is an unlikely environment for the Fed to be in a hurry to reduce rates,” said Wright.

Tara Sinclair, who previously worked at the Treasury department and is now a professor at George Washington University, said that could even translate to the Fed going on an extended pause after a December cut and holding interest rates steady for the remainder of next year.

“In my mind, they need to stay in restrictive territory all the way until it’s clear that inflation is back at their target,” she added.

Officials are plotting how quickly to get to a “neutral” policy rate that neither stimulates nor suppresses growth. They have openly discussed slowing the pace of cuts once they get closer to that level, although chair Jay Powell has conceded that policymakers lack clarity as to where that is.

“We’re pretty sure it’s below where we are now,” he told reporters in November.

Looming large over the policy outlook is the return of Donald Trump to the White House next month. Trump has vowed to enact sweeping tariffs and deport millions of Americans while also slashing taxes and regulations.

Just over 60 per cent of the economists polled in the survey, which was conducted in partnership with the University of Chicago Booth School of Business, thought Trump’s plans would have a negative impact on US growth. Most are also bracing for higher inflation if his plans to enact universal tariffs and steep levies on China materialise.

These concerns are percolating at a time when worries about price pressures still linger.

Just over 80 per cent of the 47 economists polled said that inflation over the next year, as measured by the personal expenditures price index once food and energy prices are stripped out, would not dip below 2 per cent until January 2026 or later. In September, only about 35 per cent of polled respondents made the same estimate.

The median estimate of core PCE inflation over the next 12 months also rose to 2.5 per cent from 2.2 per cent compared to September’s survey.

Economists remained sanguine about the outlook for the economy, with the median estimate of real GDP growth rising to 2.3 per cent from 2 per cent in September. Concerns about a recession were also distant, with over half of respondents estimating that the next recession would start no earlier than the third quarter of 2026.

Yet over a longer horizon, Sinclair warned that Trump’s policies would start to bite.

“I think very clearly in the long run this combination of policies is not good,” she said.

The Fed may also struggle with how to navigate this period, the economists warned, with one bracing for a “confrontation” between the president-elect and Powell if the central bank is forced to keep rates elevated to counteract the impact of Trump’s policies.

Wright said the Fed would be “more twitchy” on inflation than in the past, given the post-pandemic surge in price pressures.

“Back in 2019, the Fed could afford to take a view of ‘we’re going to wait until we see the white of inflation’s eyes’”, he said. “I don’t think that’s the attitude that the Fed is going to have today.”

HONOLULU — Bob Fernandez, a 100-year-old survivor of the Japanese bombing of Pearl Harbor, died shortly after deteriorating health prompted him to skip a trip to Hawaii to attend last week’s remembrance ceremony marking the 83rd anniversary of the attack.

Fernandez died peacefully at the Lodi, California, home of his nephew, Joe Guthrie, on Wednesday. Guthrie’s daughter, Halie Torrrell, was holding his hand when he took his last breath. Fernandez suffered a stroke about a month ago that caused him to slow down but Guthrie said doctors attributed his condition to age.

“It was his time,” Guthrie said.

Fernandez was a 17-year-old sailor on board the USS Curtiss during the Dec. 7, 1941, attack that propelled the U.S. into World War II. A mess cook, he was waiting tables and bringing sailors morning coffee and food when they heard an alarm sound. Through a porthole, Fernandez saw a plane fly by with the red ball insignia known to be painted on Japanese aircraft.

He rushed down three decks to a magazine room where he and other sailors waited for someone to unlock a door storing shells so they could pass them to the ship’s guns. He has told interviewers over the years that some of his fellow sailors were praying and crying as they heard gunfire above.

“I felt kind of scared because I didn’t know what the hell was going on,” Fernandez told The Associated Press in an interview weeks before his death.

Fernandez’s ship, the Curtiss, lost 21 men and nearly 60 of its sailors were injured. The bombing killed more than 2,300 U.S. servicemen. Nearly half, or 1,177, were sailors and Marines on board the USS Arizona, which sank during the battle.

“We lost a lot of good people, you know. They didn’t do nothing,” Fernandez said. “But we never know what’s going to happen in a war.”

Fernandez had been planning to return to Pearl Harbor last week to attend an annual commemoration hosted by the Navy and the National Park Service but became too weak to make the trip, Guthrie said.

He was “so proud” of his six years in the Navy, all of it aboard the USS Curtiss, Guthrie said. Most of his casual clothes, like hats and shirts, were related to his service.

“It was just completely ingrained in him,” his nephew said.

Fernandez worked as a forklift driver at a cannery in San Leandro, California, after the war. His wife of 65 years, Mary Fernandez, died in 2014.

He enjoyed music and dancing, and until recently attended weekly music performances at a local park and a restaurant. He helped neighbors in his trailer park take care of their yards until he moved in with Guthrie last year.

“I’d do yard work and split firewood and he’d swing the axe a little bit,” Guthrie said. “We’d call it his physical therapy.”

Fernandez’s advice for living a long life included stopping eating once you’re full and marching up stairs. He said it was OK to take a nap, but do something like laundry or wash dishes before going to bed. He recommended being kind to everyone.

Guthrie said he thinks Fernandez would want to be remembered for bringing people joy.

“He would rake people’s yards if they couldn’t do it. He would paint a fence. He would help somebody,” Guthrie said. “He would give people money if they needed something. He was so generous and such a kind person. He made friends everywhere.”

Fernandez is survived by his oldest son, Robert J. Fernandez, a granddaughter and several great-grandchildren.

There are 16 known survivors of Pearl Harbor that are still alive, according to a list maintained by Kathleen Farley, the California state chair of the Sons and Daughters of Pearl Harbor Survivors. All of them are at least 100 years old.

Fernandez’s death would have brought the number to 15 but Farley recently learned of an additional survivor.

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Republican enthusiasm for culling and combining the many US banking regulators is complicating efforts by the incoming administration of Donald Trump to find heads for those watchdogs.

The problem is particularly acute for the Consumer Financial Protection Bureau, which focuses on the way lenders treat customers. The CFPB has been a target of hostility from Republicans since its creation after the 2008 financial crisis. A number of experienced candidates have demurred when contacted about the position, people familiar with the search said.

“Republicans think the CFPB is unconstitutional, and even if you do make progress in protecting middle-class and low income Americans, the Democrats will never give you credit because you’re wearing the wrong colour jersey,” said a former senior financial regulator who is not interested in the job.

Recruiting issues are becoming more serious because of growing ferment around consolidating banking regulatory and supervisory responsibilities that are currently spread among the US Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.

Some potential candidates have been interviewed by Elon Musk and Vivek Ramaswamy, the bosses of Trump’s newly created advisory committee, the Department of Government Efficiency (Doge), and have been asked about streamlining regulation, people close to the process said.

Musk has called for eliminating the CFPB and Ramaswamy asserted last week on social media that it was “one of the easiest agencies to shut down”. The Wall Street Journal reported that some regulatory candidates have been asked whether it would be possible to eliminate the FDIC, which has protected bank depositors since the Great Depression.

The Trump transition team’s questions, combined with enthusiasm from the Republicans due to run key committees on Capitol Hill for lightening the regulatory load, could herald the first serious effort to reshape the guardrails for the banking industry since the 2010 Dodd-Frank law.

“I think the Trump team might be serious about this,” said Bill Isaac, a former FDIC chair, adding that he has talked to leading Capitol Hill players about his proposal to merge the OCC and the supervisory functions of the Fed and FDIC into a new regulator. “The system is broken.”

Tim Scott, the Republican in line to chair the Senate Banking Committee, has concerns with the current structure of the US’s bank regulatory system, his spokesman said, but did not specify whether he supported consolidating banking regulators. Scott “looks forward to working with the incoming Trump administration to find solutions to streamline regulation, reduce red tape, and increase efficiency while ensuring the continued stability of our financial system.”

But experienced Washington hands point out that multiple prior attempts to consolidate the patchwork of banking regulators into a single super-watchdog have failed. In 2010, Republicans provided crucial votes to help kill the idea.

“Most regulatory scholars support some form of consolidation among bank regulators in the US, but every attempt at doing this has failed. After every financial crisis, there is more regulation and more regulators than there were before,” said Aaron Klein, a senior fellow at Brookings and former Treasury official under Barack Obama.

During Trump’s first term, the acting head of the CFPB Mick Mulvaney at one point refused to request any funding for the watchdog, but it eventually resumed normal operations.

“Congress is needed for any consequential structural changes and it is incredibly difficult to envision a scenario where this issue makes it on the agenda, let alone gets the Democratic support necessary for enactment,” said Isaac Boltansky, managing director at BTIG.

Investor groups and former regulators have expressed alarm at the prospect of weakening the FDIC, noting that it is well known and popular with consumers, in part because most banks tout its deposit insurance as part of their advertising.

“FDIC has a perfect record of protecting insured deposits for over 90 years. Strong consumer confidence in the brand, providing stability during crises,” tweeted Sheila Bair, a former FDIC chair.

Patrick Woodall, managing director for policy at Americans for Financial Reform, said: “The FDIC stamp of approval has safeguarded depositors — and confidence in the banking industry — for nearly a century, while the CFPB has a strong track record of standing up for the little guy. Billionaire ideas about consumer protection and financial stability will do nothing for everyday people.”

Even Isaac said he opposes eliminating the FDIC as an independent agency, because of its emergency bank takeover responsibilities.

“I don’t think that makes any sense,” he said. The idea is to have the FDIC be an independent, bipartisan agency and the Treasury is anything but.”

The Trump transition team did not reply to a request for comment.