- The federal reserve has not said interest rates yet In 2025, it seeks greater clarity on the final effects of President Donald Trump’s tariff policy. While Federal Reserve Chairman Jerome Powell suggested that it is a “good situation” to act decisively if necessary, some economists worry that this approach may make the central bank slow to respond to contraction.
Consumer feeling Decline Amid the uncertainty in commercial policy, Federal Reserve Chairman Jerome Powell admitted on Wednesday and a comment at the central bank.Beige bookIt suggests that companies already feel the effects of President Donald Trump Definitions.
Policy makers at the Federal Reserve have not been transferred through “soft data”, however, interest rates have not been transferred this year yet. After the central bank The last decision To keep the federal funds stable between 4.25 % and 4.5 %, Powell reported that he and his colleagues are ready to behave decisively-but not even the so-called “difficult data” on unemployment and inflation gives them a clear reason.
“Look at the state of the economy,” he said. “The work is strong, and inflation is low. We can bear patient because things are revealed. There is no real cost to wait for us at this stage.”
However, other economists note that the “waiting and vision” approach carries its own risks.
“Central banks that interact instead of pre -data are delayed in changing policy,” said Paul Donovan, the chief economist at UBS Global Wealth Management. “Economic data is increasingly less reliable, making the data dependence more dangerous.”
However, at the present time, Powell believes that the main measures of economic conditions have bought a valuable time in the federal reserve. the Junction Report The Federal Reserve Chair indicated that the unemployment rate decreased in April, with the unemployment rate remaining low, by 4.2 %. The central bank prefers Inflation It also decreased, although it is still 2 % higher than the Federal Reserve goal.
“The health economy is still,” if it is said in some very increasing feelings on the part of people and companies. “
Meanwhile, other economists warn that the recession signs are already present fermentation In the ports of the country in the middle of a Dramatic In shipment, especially between the United States and China. Torrestin predicted behavior, chief economist in the private stock giant Apollo, Group hairstyles It can reach the industry this month and stimulate the recession by summer.
“We see shipping data, we see all of it,” Powell said.
However, he mentioned the possibility of commercial talks to change the situation, the day before Trump’s announcement deal With the United Kingdom, in the meantime, Treasury Secretary Scott Bessin and American Trade Representative Jamison Jarir It will meet With their Chinese counterparts this week; Pisint said previously that the current confrontation is among the world’s largest economists Incomprehensible.
Powell added that the Federal Reserve does not need to be accelerated because the rate of federal funds, its traditional weapon for monetary policy, is still “moderately restricted.” In other words, the Central Bank can quickly reduce prices if necessary, giving it a lot of ammunition if the recession is achieved.
He said: “The data may move quickly or slowly, but we believe that we are in a good position where we let things develop and become more clear.”
Stagnation risk feed
However, the uncomfortable message may be that the Federal Reserve feels that it has no choice but to stand on Pat and watch what is revealed like anyone else. Central Bank male The risks have increased on both high unemployment and high inflation, hinting to the worst scenario of cases.Recession“
If the customs tariff disorders end up ending, causing fugitive prices and increasing unemployment, then the central bank Puzzle It is that the solution to one of these problems usually exacerbates the other. When inflation rises, the Federal Reserve raises interest rates to cool the economy. But when the unemployment rises, the bank does the opposite and reduces the rates to stimulate growth.
Powell said that both variables are crowded side by side, as it creates a “complex and difficult rule.” He stressed that such a scenario has not yet succeeded.
“The evaluation is, you are waiting,” said the President of the Federal Reserve.
When Push To Shou comes, many believe in Wall Street that the Federal Reserve will give priority to support the labor market. Traders are currently pricing three to four discounts by the end of the year, according to the CME’s Group Fedwatch toolThe dropping of the Federal Reserve carries fixed prices again in June before reducing 25 points in July.
Charlotte, Charlotte, Charlotte, Charlotte chief investment employee, said, however, the Federal Reserve is withdrawing in two directions.
“For this reason, the Federal Reserve will have to wait for unemployment to rise before the resumption of cutting prices,” he wrote on Wednesday, “By this point, the time may have passed.”
This also means that the central bank will try to play, said Matthew Balie, the chief investment official of Nomura Capital Management.
“The fiscal policy may be more suitable for this constellation of risks than monetary policy,” Balai wrote in the note on Wednesday. “Uppercide management may be a very frank tool for navigation between two decades.”
This story was originally shown on Fortune.com
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