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What does Trump’s second term for Washington, Business and the world mean

A senior Federal Reserve Officer has a possibility that Donald Trump’s trade war leads to a continuity of inflation on “50–50”, as he warned that American rate-sectors would face “right” uncertainty.

St. Louis Fed President Alberto Musalam told Financial Times that while Trump’s levy could be promoted inflation For “a quarter or two”, “there was an equally potential landscape where the effect of tariffs on prices could last long”.

Trump administration has already brought Tariff us The country’s trading partners were threatened with high inflation and slow economic growth, up to the highest level in nearly 90 years. Competitive forces have inspired policy makers to adopt a waiting-and-looking approach after a reduction of interest rates during the second half of the previous year.

Bond Markets have also been harassed by Trump’s “Big, Beautiful” budget bill in recent weeks, which will add $ 2.4TN to public debt in the next decade to the Congress’s fiscal watchdog estimates. The bill was passed from the House last month but is still being debated in the Senate.

This year, Muslims, who voted in the Federal Open Market Committee, said that officials may benefit from a favorable scenario where uncertainty on trade and fiscal policy “goes into July”. He said that the Fed would be put back on the track to cut rates in September, although he said “he preferred to think about” decisions “in terms of scenarios instead of time.

However, the Muslim also extended the possibility of another scenario “where inflation starts to grow physically and we would not know if it is a temporary, one-band increase in the price level or whether it is more firm”.

The Muslim said that “right now, it is probably 50-50 an assessment” that either the situation will be revealed.

Economists say that the reluctance of the fed deduction is in large parts that tariffs will increase US prices in the coming months and push the headline PCE inflation up to 2.1 percent level than the target of 2 percent.

Recent surveys show that consumers and business expect high inflation in the coming months and years as tariffs are effective. Those expectations have expressed concern among the Fed officials that people may lose confidence in the central bank’s ability to keep inflation low.

Fed’s discussions -the expansion comes in a politically frightening moment for the central bank. Trump has repeatedly attacked J Powell for not cutting rates, and on Friday A “full point” deficiency is said In the cost of borrowing.

Political intervention can make it more difficult for the central bank to reduce interest rates. Mustham said that independence was important because it was allowed for “more anchor inflation expectations”.

Fed officials – including Mustham – check the expectations of inflation as a significant pre -condition for cuts cuts, or keeping it in “anchor”.

The chairman of St. Lewis Fed said, “If the market-linen and medium survey measures lead to long-term inflation expectations, it becomes very important to prioritize the price stability at that time,” said the chairman of St. Luis Fed.

The Muslim’s comment on Friday, the middle-June policy of the Fed comes beyond the blackout period for vote, where the authorities will definitely hold the interest rates almost.

FOMC will also publish a new round of quarterly economic estimates.

Muslims said that despite Trump’s so -called liberation day tariff declaration in early April, despite the more indefinite economic environment, “I did not expect to change my number relative to the March round”.

“I think we still have some uncertainty. Through summer, we need to understand what the business talks can be, whether legal challenges can be, or how it may resolve in terms of tariff. I am also focusing on fiscal policy and what is its size with immigration policy and regulatory policy.”

He said that the market response to “liberation day” definitely attracts my attention “.

The Muslims who worked in the decades working in finance before joining the Fed said: “There are days when the market sends you a very clear message and it was one of those days.”

Investors responded to Trump’s policies by selling American equity and dollar as well as 10-year Treasury Bonds. The unusual correlation indicated concerns among investors of the US’s long -held shelter.

The conversation with the asset managers suggested that they were slowly looking at their portfolio, even in recent weeks, the markets had stabilized, the Muslim said.

The chairman of St. Louis Fed said, “The situation was one of the overweight American wealth and low weight property in other countries.” “And the asset managers can move forward that indicating.”