President Trump’s promise to curb inflation became more complicated after the Consumer Price Index (CPI) of January was in hotter than expected last week.
The report rattled markets, causing the shares to put pressure, while bond returns rose, because investors reduced expectations for an interest rate reduction, while some even breathe new life into the possibility of an increase.
But let alone a walk – only a delayed tariff reduction could bring President Trump to a “collision course” with the Federal Reserve, veteran economist Nouriel Roubini warned.
‘Even keeping it on hold will be put [Powell] On a collision course with Trump, because Trump now wants to lower the rates, “said Roubini.” We already see those tensions and they are going to accumulate. “
Just before the inflation release, Trump urged the Fed to lower the rates, posting on the truth, which the interest rates reduced “hand in hand” with his tariff agenda.
His call for lower rates comes despite the repeated pushback of the Federal Reserve chairman Jerome Powell, who again spotted this week that he is not in a hurry to lower the interest rates. Powell spoke before the congress on Wednesday and said to the legislators of House: “I would say that we are close by, but are not on inflation … We want to keep the policy restrictive for the time being.”
And although Powell warned this week that “it would be unwise to speculate” about the economic consequences of rates, Wall Street remains skeptical about Trump’s policy agenda. Roubini doubled his warning that the proposed policy of the Trump administration – including rates – runs the risk of being counterproductive by adding current inflatoid pressure, while Moody’s Analytics Chief Economist Mark Zandi warned that consumers will “bear the burden”.
“Rates, protectionism, economic war with our friends and allies, and also with China, his inflation and reducing growth,” explained Roubini.
And Zandi repeated the concern that Trump’s rates will contribute to the inflationary pressure and told me that Trump’s tariff proposals will feed higher inflation, increase interest rates and limit economic growth – factors that further would “complicate”.
Zandi sees this risk increased after the CPI print of January, which demonstrated “disinflation that came to an end” as prices rose in a number of sectors, including energy, food, used cars and trucks, and motor vehicle insurance.
“The broad nature of the price is increasing … It is something to worry about with regard to rates,” said Zandi on the morning assignment of Yahoo Finance. “The disinflation that we had enjoyed is now over, and unfortunately we are not completely back to the target of the Federal Reserve, so that is disturbing.”
