Skip to content
The strong labor market has for several months, given the rest in the Federal Reserve, which can stop interest rate cuts so that it is more clear about how President Trump’s policies affect the economy. The new data released on Friday strengthened the patient’s approach.
Central Bank officials are widely expected to maintain interest rates when they announce their next decision on May 7. After reducing interest rates by a percentage of last year, the Federal Reserve has chosen since January to make additional discounts. This left interest rates in the range of 4.25 percent to 4.5 percent.
Even this point, officials have only felt a little urgency to reduce interest rates because the economy has so far been in full swing. Mr. Trump’s attempts to reset global trade relations through sharp tariffs are now risking this.
Despite the President’s decision in April to temporarily stop temporarily from the most striking fees of almost all trading partners in the country, companies have struggled to move uncertainty. Many have suspended large investments and slowdown, and some already raise prices. Investigative studies indicate that consumers have also turned significantly about expectations, which concerns that this pessimism will eventually translate into less spending.
Fear is that consumers will reduce strongly so that companies will have to lay off workers, which increases economic slowdown. Jerome H. Powell, the head of the Central Bank, warned that in addition to the street growth, the customs tariff for the nature that Mr. Trump seeks to fuel inflation as well.
This combination risk the Federal Reserve Placement in linking and more in the hair of the cross for Mr. Trump. In recent weeks, the president has risen his attacks on Mr. Powell, as he renewed the Fed to reduce interest rates. On Friday, he again renewed these pressures, and writing in a post on social media: “No inflation, the Federal Reserve must reduce its rate !!!”
The central bank is responsible for enhancing low and stable inflation as well as the health labor market. Officials now have to play what they will do if their goals for the economy become tense with each other.
The latest job report, which showed better growth than expected in salaries and a fixed unemployment rate, is welcome news for officials. This results in inflation data earlier this week, which confirmed that in March, price pressures remained somewhat defeated even when it remained higher than the goal of the Federal Reserve by 2 percent.
Officials are now discussing whether the next increase in consumer prices will be just a temporary amendment that fades over time, or if it will constantly lead to high inflation.
After just stumbled with the increasing inflation in the wake of the epidemic, the Federal Reserve Bank stressed the importance of ensuring that tariffs related to tariffs are not peeled in a greater problem. Last month, Mr. Powell said that containing inflation was very important to enhance the health labor market.
“Without the stability of prices, we cannot achieve long periods of strong labor market conditions that benefit all Americans.”
This focus indicates a high strip for re -interest rates in the Federal Reserve. Officials will need to see clear evidence that the economy is weakening before taking action, which may take some time.
Christopher J. Waller, ruler, He said In an interview with him recently, the tariffs did not expect the economy to affect an important way before July, indicating that there are no cuts in the short term.
Preston Moy, chief economist in the research and advocacy group, said he expected the labor market to slow down during the next two months instead of collapsing sharply.
“When you become sharp when you have these large nails in the demobilization of workers,” he said. This will depend on what Mr. Trump does with definitions. If the president reflects the path through the 90 -day deadline in early July, the labor market may avoid more painful success. If the customs tariff remains in place, or uncertainty about the trade policy, the damage may begin to install.
After Friday’s report, traders in federal funds have reduced their expectations for interest rate discounts from the central bank this year. They see much lower possibilities than the June reduction, but they continue to predict a quarter of a point in July. Throughout the year, they see that the Federal Reserve cuts at least three times.