Economics
Fed Seen as More Likely to Cut Rates After U.S. Tariff Boost
- Central bank to focus on impact of higher levies on growth
- Market reaction to Trump move will help shape Fed’s response
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The Federal Reserve probably will be more inclined to cut interest rates now that President Donald Trump has followed through on his threat to increase tariffs on U.S. imports from China. But it won’t rush into doing so.
While the higher levies will put upward pressure on inflation by raising import prices, the central bank will likely be more attentive to the potential drag they’ll exert on the economy by depressing consumer and business spending, Fed watchers said.