Will Tariffs Keep the Federal Reserve From Cutting Interest Rates This Year? | Global News Avenue

Like everyone, Fed officials are paying attention to and waiting for the tariff President Donald Trump what will collect and what impact on the economy.

Trump postponed a 25 % tariff on Monday Canada and Mexico One month, but still plans to impose 10 % tariffs on imports from China on Tuesday. Fed officials at the recent meeting Stir up brakes Relax Monetary policy Part of the reason is the uncertainty of potential tariffs and its economic impact.

It seems that on Monday’s actions, it seems that it has not been given whether it will reduce the interest rate. The two Federal Reserve policy makers pointed out in a separate comment on Monday that Trump’s tariff risk.

“What we see this morning does indicate that there are many uncertainty in the development of policy. If you don’t know what practical policies will be implemented, what will be actually impossible for possible effects?” Susan Collins (Susan Collins) in an interview CNBCEssence

Inflation is running on the Fed’s goal

The imminent trade war was the last residue when the Federal Reserve officials tried to conquer the surge in inflation. As of December, the inflation rate is still higher than the Fed’s annual target. In January, Federal Reserve officials Holding the benchmark interest rate of the Central Bank At a high level, it keeps pressure on various loans to prevent borrowing and expenditure from borrowing and expenditure, and prevent inflation from erupting again.

Any frustration in the battle against inflation may make the Federal Reserve longer interest rates and even increase interest rates again. However, Collins said that if the Fed did not cause continuous consumer prices to accelerate, and if consumers did not start expecting the inflation rate, they would not necessarily increase their rates due to rising tariffs.

Consumer inflation expectations are important

Fed officials often say that consumer inflation expectations may be a prophecy of self -realization, because people can increase expenditure when expected to rise, which can create demand and increase prices in itself.

According to a report from Bloomberg, Raphael Bostic, president of Atlanta Federal Reserve Bank, gave a similar comment on reporters after a speech at the Atlanta Rotary Club. He said that the Federal Reserve may maintain the impact of tariffs in the next few months.

Bolstic told Bloomberg: “There is a state that you may check through tariffs instead of the main driving force of the policy, but this depends again.” ” It is appropriate to think to make policies in some way. “