Spencer Platt / Getty Images
-
Jerome Powell’s federal reserve chair said the central bank is waiting to see that President Donald Trump’s burglaries will affect the economy of the economy before making any bigger moves.
-
Trump Tariffs that change rapidly to foreign countries have persisted on uncertainty, and there are worries that import taxes will harm the labor market and inflation. This could force the central bank to adjust its monetary policy in response.
-
The prospects for March were reduced to the key rate of Fed Pale after Powell’s comments.
In an economy where everything is suddenly uncertain, the federal reserves are waiting to see how things are shaking before they make any great moves.
Jerome Powell’s federal reserve president emphasized a caution on Friday at the Central Bank’s attitude in a performance at the University of Chicago. He said Fed waited to see President Donald Trump swallowed up new economic policies before adjusting to monetary policy in response.
“Caution costs are very, very low,” Powell said. “The economy is fine. We don’t need anything, really. And so we can wait and we should wait.”
In recent weeks, Mass release of federal workers and Irregular threats of tariffs have developed financial markets and Intended uncertainty for business people and consumers. She also encouraged speculation about whether the federal reserves would be forced to reduce the borrowing costs to increase the economy and prevent the serious increase in unemployment.
Powell’s comments threw some cold water to expect speeds. On Friday afternoon, the financial markets were prices in just 3% chance that the Federal Reserve Committee will reduce FED rate when the next meet in March, a decrease of 12% day before, according to the Fedwatch tool of the CME Group, which provides for the movement of the Fed Funds Fares Fed Federals.
Lifting economic turns could put the Fed in a double relationship.
The Central Bank’s job is for inflation to be low and employment. To lower the post-parasite burst inflation, Fed kept his influential Federal funds rate High enough to throw the sand into the gears of the economy, pushing the costs of borrowing into all kinds of loans to discourage borrowing and consumption. The inflation has fallen since its peak in 2022, but it still works higher than 2% of the annual Fed goal. For now, the labor market remained resistantwith unemployment remained low despite the withdrawal of high interest rates.
However, economists are afraid of tariffs might Encourage the cost of living and accelerate inflation; At the same time, they reduce economic growth, causing damage to the labor market. In this case, the financial markets are betting that the Fed will have to leave its inflation struggle and reduce interest rates to prevent economic decline.
Powell said Fed carefully careful about how Trump’s trade wars and mass deportations would affect the economy. The second big unknown is the federal budget: Trump and Republican legislators work on a budget that is likely to include large tax reliefs, an ambitious goal of reducing federal consumption and high probability in Accelerating consumption deficit.
“Uncertainty about changes and their probable effects remain high,” Powell said. “While analyzing incoming information, we are focused on the separation of the noise signal. As the prospect of developing, we should not be in a hurry and we are well positioned to wait for great clarity.”
Read the original article about Investopedia
