Title: President Trump Endorses Fed's Decision to Hold Rates Steady, Amid Tariff Rollout
Content:
President Donald Trump has expressed support for the Federal Reserve's decision to maintain interest rates during its latest policy meeting. Trump stated that he believes the central bank made the "right thing to do" in holding borrowing costs steady.
This statement comes amidst Trump's announcement of new tariffs on imports from Mexico, Canada, and China. Some economists predict that these tariffs could impact inflation and potentially influence the Fed's future rate plans.
According to Paul Ashworth, chief North America economist for Capital Economics, the surge in inflation expected from the tariffs could eliminate the possibility of future rate cuts in 2025. JPMorgan chief economist Michael Feroli believes these developments will likely reinforce the Fed's inclination to remain cautious.
Trump did not provide specific reasons for his support of the Fed's decision. Notably, he had previously expressed a desire for lower rates.
The impact of the tariffs on the economy remains uncertain. James Fishback, CEO of Azoria, believes the Fed should continue holding rates steady, considering the long-term economic goals outlined by Trump.
EY Chief Economist Gregory Daco estimates the tariffs could result in a contraction in US GDP by 1.5% in 2025 and 2.1% in 2026. He also predicts a rise in inflation by 0.7% in the first quarter, gradually easing as demand declines and the dollar strengthens.
Wilmington Trust bond portfolio manager Wilmer Stith suggests the tariffs could weaken US economic growth, potentially preventing the Fed from cutting rates. However, he notes that the Fed may consider rate cuts if the job market weakens.