The US Federal Reserve has decided to keep interest rates unchanged as it observes the potential economic consequences of President Donald Trump's policies on trade, immigration, tax, and deregulation. Fed Chair Jerome Powell emphasized the uncertainty surrounding these policies, stating that the central bank needs more clarity before assessing their implications. The Fed faces a dilemma as Trump's protectionist measures could be inflationary, while his tax cuts and deregulation plans could boost growth. Powell acknowledged the changing economic landscape compared to Trump's first term, highlighting higher inflation and altered trade relations. The Fed's cautious approach involves monitoring data closely and keeping all policy options open.
The US Fed eral Reserve Board is keeping US interest rates on hold while it waits to see what Donald Trump actually does on trade, immigration, tax and deregulation.
Powell and his colleagues might start to get a better view of the Trump agenda this weekend, with Trump having threatened to impose a 25 per cent tariff on Mexican and Canadian imports to the US and a 10 per cent tariff on imports from China, starting this Saturday.Those tariffs, if they are imposed, are separate from the 10 to 20 per cent baseline tariff on all imports and a 60 per cent tariff on imports from China that Trump has said he will introduce.
‘We study the data, we analyse how it will affect the outlook and the balance of risks, and we use our tools to try, given our best understanding to achieve our goals. That’s what we do … Don’t look for us to do anything else.’Inflation is higher, trade relations are different and “the range of possibilities is very, very wide”, he said, although he acknowledged that during Trump’s first term, there was some evidence that US businesses had cut back their investment during the trade wars.
By then, of course, the Fed – and the rest of us – would have a somewhat clearer view of what Trump is actually doing, some sense of the likely effects of his policies and a better understanding of the responses to them, particularly from the trade partners hit by any US tariffs.
FED INTEREST RATES DONALD TRUMP TARIFFS INFLATION ECONOMIC GROWTH
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