Trump Makes It Harder to Get Goldilocks Just Right

Goldilocks has her work cut out. Just a few months ago, investors envisaged an ideal scenario for the coming year: inflation beaten, interest rates coming down synchronously, and a global recession averted. An economy that's neither too hot, nor too cold. Almost worthy of a fairy tale come to life.

For things to work out so well requires clearing a few hurdles. That's especially true in Asia, whose prosperity in the past few decades owed much to China’s ascent, the expansion of trade and the laying of vast — and complicated — manufacturing supply lines. Donald Trump's return to power, and the accompanying threat of higher tariffs, makes for some uncomfortable choices. Officials may have to tolerate prolonged currency softness or allow domestic growth to disappoint. Lower rates justified by newly contained prices risk undercutting brittle exchange rates.