Fed, Trump
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While generally saying the labor market remains solid and inflation elevated but showing progress toward the Fed’s 2% annual target, the minutes reflect a mixed assessment of whether the tariffs will spur inflation or be more of a one-time hit that will not lead to higher long-term price increases.
The Trump administration's tariff plans may well just cause a one-time jump in prices, but the risk it could cause more persistent inflation is large enough for the central bank to be careful in considering further rate cuts,
Tariffs pose rising inflation and rate cut risks for H2 2025 as CPI data hints at early price pressures in key goods. See why markets may be underpricing this threat.
Inflation rose last month to its highest level since February as President Donald Trump’s sweeping tariffs push up the cost of a range of goods, including furniture, clothing, and large appliances.
The president wanted to take Jerome Powell, the Fed chair, to task over the cost of renovations to the central bank’s headquarters, but Mr. Powell was having none of it.
Federal Reserve Chair Jerome Powell is facing pressure from all sides as the Fed’s banking regulation conference kicks off this week. President Trump has been threatening to fire Powell while
TRUMP VISITS THE FED: Trump visited the headquarters of the Federal Reserve this afternoon, the White House said. Trump has tried to pressure Chair Jerome Powell to lower interest rates, and Trump and top administration officials have criticized him over the cost of renovations to the building.
Fed watchers say tariff inflation data over the next 30-60 days will indicate whether the Fed will approve two, or maybe one, rate cuts of 0.25% each this year during late 2025.
The Federal Reserve need not cut interest rates with companies planning to raise prices later this year in response to higher import taxes and with the job market still stable, Atlanta Fed President Raphael Bostic told Reuters.
The best the Fed can do (whether or not tariff shocks appear) is keep nominal spending on a stable trajectory. New data from the Bureau of Economic Analysis confirm that inflation remained low in ...