NEWS: Tariff Disorder Enhances Fed Interest Rate Reduction Expectations

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It is expected that interest rates will remain unchanged, while focusing on the impact of various economic factors, including lower-than-expected inflation, faster-than-expected gross domestic product (GDP) and employment growth.
On the contrary, Trump and other senior government officials have repeatedly urged the Federal Reserve to cut interest rates to boost economic growth. Economic growth is expected to slow down from 3.2% in the previous quarter as the stimulus effect of tax cuts weakened last year.
But when asked on Friday whether the new U.S. tariff measures would lead to interest rate cuts, Bostick did not rule out that possibility.
"It's possible, depending on the severity of the response," Bostek told reporters. "It really depends. It depends on how the enterprise decides to do it and how long the tariff measures last.
Forecasts released by the Federal Reserve in March show that most policymakers expect interest rates to remain unchanged until the end of this year. Earlier this month, Federal Reserve Chairman Powell predicted that recent low inflation indicators were temporarily affected by factors, and reiterated his view that there is no urgent need to raise or cut interest rates.
Inflation data released on Friday showed that price pressures remain low.
** Interest rate reduction bet**
But as the United States raised tariffs on $200 billion of Chinese imports to 25%, short-term interest rate futures traders again bet that the Federal Reserve will cut interest rates by 25 basis points by December to combat the economic slowdown.
The target range of the federal funds rate in the United States is currently between 2.25 and 2.5%. The Federal Reserve believes that this level of interest rate will neither stimulate nor inhibit economic growth.


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