Fed: Likely Higher Inflation, Higher Unemployment Due To Trump's Trade Policies

Thanks, Trump!

The Federal Reserve kept interest rates on hold and called out growing dangers in the US economy amid Donald Trump’s erratic rollout of an aggressive trade strategy.

Jerome Powell, the US central bank’s chair, cautioned that the president’s tariffs were likely to raise prices, weaken growth and increase unemployment if maintained.

Fed policymakers cautioned that “the risks of higher unemployment and higher inflation have risen” as they opted to maintain the benchmark interest rate for the third time in a row. “Uncertainty about the economic outlook has increased further,” they said in a statement.

With inflation expectations – how consumers think prices will move – rising, Powell, the Fed chair, said the “driving factor” appeared to be Trump’s tariffs.

At a press conference, he said: “If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.”...  (our emphasis)

The Malignant Fascist had let it be known he wanted the Fed to cut interest rates.  Luckily we have an independent Federal Reserve (at least for now).

 

BREAKING: Fed Lowers Interest Rates By A Half Point

 

Responding very positively to a strong economy that has seen inflation cooling to a 3-year low, the Federal Reserve lowered its prime interest rate by a half point today, its first rate cut since 2020:

The Fed cuts interest rates by a half percentage point, an unusually large move. This signals that central bankers think they are winning their war against rapid inflation, and that they are now turning their attention to keeping the job market from weakening too much.

The Fed also projected another half point of rate cuts later this year, which would lower the central bank’s policy rate to 4.4 percent. And by the end of 2025, they expect rates to be down to 3.4 percent. 

That’s a more aggressive rate cut path than Fed policymakers had previously anticipated. When they last released economic estimates in June, they expected to cut borrowing costs to 4.1 percent by the end of next year...

This is even more good news for John McCain Joe Biden and Kamala Harris!

Good News From The Fed

This, if combined with the modest stimulus the Obama Administration is proposing with its "fiscal cliff" deal, will significantly boost the economy:

"The Federal Reserve took a genuinely unexpected step Wednesday afternoon when it announced it would significantly enhance its current monetary easing program. The Fed, for the first time, committed to keeping monetary policy loose until the economy crosses precise thresholds — specifically, an unemployment rate below 6.5 percent or a inflation above 2.5 percent."