Federal Reserve Weighs Interest Rates Amid Tariff Impact on Inflation
By CHRISTOPHER RUGABER, Associated Press
Washington, D.C. — As President Trump continues to advocate for interest rate cuts, the Federal Reserve appears poised to maintain its key rate for several months while assessing the effects of his extensive tariffs on both hiring and inflation. Recent tariffs, including a substantial 145% tax on imports from China, have raised concerns about their potential impact on consumer prices.
Chair Jerome Powell emphasized the need for caution, indicating that the Fed is unlikely to alter rates at its upcoming meeting. While inflation remains near the Fed’s 2% target, economists warn that ongoing tariff impositions could lead to price increases. Trump, despite conflicting with Powell, chose not to dismiss the Fed Chair, hinting at future leadership changes post-Powell’s term in May.
Economists predict rising inflation due to tariffs, with 55% of manufacturers planning to transfer tariff costs to consumers. However, uncertainty surrounding trade policies has led to businesses postponing investment decisions, potentially influencing hiring and economic growth. If a slowdown occurs and unemployment rises, the Fed may swiftly shift toward rate cuts, balancing its dual mandate of fostering employment while maintaining price stability.
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