The US Federal Reserve has once again warned that inflation may make a strong comeback if the US President goes ahead and slaps another round of tariffs on US imports. Last month, the US Federal Reserve lowered economic growth forecasts due to newly imposed US tariffs. The latest report by the US Federal Reserve shows the lingering preoccupation of rising inflation caused with the rising price pressure of tariffs.
The Fed also noted that the economy is doing well with full employment, that inflation had subsided but last month, it lowered growth projections from 1.7% to 1.6% due to tariffs. Business sentiment is also low despite the strong economy. The Fed also reiterated that there is uncertainty on the future course of tariffs and trade with other countries. The latest Fed minutes have kept the same tone and policy of last month and most board members think that a at least one rate cut is in the offing soon.
A trade deal with the EU has been postponed until further negotiations despite a deadline of 9th July. US Treasury Secretary Scott Bessent Trump said that a baseline 10% tariff will remain as many countries have failed to sign trade deals with the US.
The current Fed base rate is at 4.25%-4.50%.
President Donald Trump is furious at Jerome Powell for keeping rates so relatively high and is putting pressure on him to resign. Fed Chair Powell has repeatedly said that he will be fulfilling his term until its end and won’t be resigning. President Trump wants to replace Powell with someone who is willing to immediately cut interest rates. Recently, the President sent Chair Powell a letter with a list of countries that cut their rates, and telling him that he is late.
Newsroom
Leave a Reply