Analysts and investors overwhelmingly think the Fed will choose to sit tight, preferring to wait and see how the new levies affect the US economy before moving on rates
US Federal Reserve Chair Jerome Powell. Image: KAMIL KRZACZYNSKI / AFP
The US Federal Reserve faces a tough choice Wednesday as it contends with President Donald Trump's tariff rollout: Prioritize tackling inflation by holding interest rates high, do nothing, or stimulate growth and employment by cutting them?
Analysts and investors overwhelmingly think the Fed will choose to sit tight, preferring to wait and see how the new levies affect the US economy before moving on rates.
"It's an unfavorable mix for the Federal Reserve," Nationwide chief economist Kathy Bostjancic told AFP.
"They're going to see upward price pressures at the same time when economic growth is slowing," she said. "And then they'll have to put a weight on what do they believe?"
The US central bank has a dual mandate from Congress to act independently to achieve stable prices and maximum sustainable employment, which it does mainly by raising and lowering the level of its key short-term lending rate.