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Following is additional information from The Guardian:Donald Trump’s new tariffs are “larger than expected” and the economic fallout including higher inflation and slower growth likely will be as well, the Federal Reserve chair said on Friday in remarks that pointed to the potentially difficult set of decisions ahead for the central bank.
In prepared remarks for a business journalists’ conference Powell said: "We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent."
Powell added that it was not the Fed’s role to comment on the Trump administration’s policies but rather to react to how they might affect an economy that he and his colleagues regarded just a few weeks ago as being in a “sweet spot” of falling inflation and low unemployment.
As the new policies and their likely economic effects become clearer, we will have a better sense of their implications for the economy and for monetary policy. While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.
The last time US tariffs were this high was after president Herbert Hoover signed into law the controversial Smoot-Hawley Tariff bill in 1930, which saw tariffs on many imported goods averaging nearly 40%. Just as now, there was global indignation at what was seen as unreasonable protectionism by the US, with nations such as France threatening firm retaliation if it did not back down.
As politicians sought to negotiate with the US, European businesses took a more direct course of action by boycotting US produce. In the UK, department stores even placed placards in their windows advertising an ‘Empire loaf’, which was made with 85% Canadian flour.
The impact of Hoover’s tariffs were, as predicted by hundreds of economists, highly damaging to the US, with estimates of imported goods, many of which were needed by US industry and commerce, plummeting by nearly half.
On Friday British prime minister Keir Starmer spoke to his Australian and Italian counterparts, Anthony Albanese and Giorgia Meloni, about how they should respond to Trump’s tariffs, saying they agreed an “all-out trade war would be extremely damaging and is in nobody’s interests”. Reuters reports that in separate calls, Starmer said it had been “clear for a long time that like-minded countries must maintain strong relationships and dialogue to ensure our mutual security and maintain economic stability”.
© 2015 Mutual Fund Observer. All rights reserved.
© 2015 Mutual Fund Observer. All rights reserved. Powered by Vanilla
Comments
So if Jerome was forced to cut Interest rates as per the stable genius' direction, would we then have a double-barreled (Tariffs + Lower interest rates) gun stoking inflation?
Its almost like somebody is deliberately planning on burning the US economy down to ashes.
and the Fed will likely stay on the sidelines until it has more clarity about the economy."
“'Our obligation is to ... make certain that a one-time increase in the price level does not
become an ongoing inflation problem,' Powell said in remarks delivered in Arlington, Virginia."
"Trump, separately, urged Powell to cut rates, citing lower inflation
and energy prices on his social media platform, Truth Social."
“'This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,' Trump wrote.
'CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!'”
https://apnews.com/article/tariffs-inflation-economy-trump-powell-490417656971634592bbeb3b2ade3593
Gotta keep the puppet-master in Moscow happy.
"Thank" you again.
And you know what you can do with that "thank" you. Amazing that nobody appreciates you - ever notice that?