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How Trump Tariffs Influence FED’s Interest Rate Decision

How Trump Tariffs Influence FED’s Interest Rate Decision

Published:
2025-05-07 10:55:02
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The Federal Reserve is poised to maintain interest rates unchanged this week, with markets pricing in a 95% probability of no action. A cautious stance prevails as policymakers weigh sluggish Q1 economic growth against persistent inflation slightly above the 2% target. The labor market’s resilience provides additional runway for observation.

Trade dynamics loom large in the calculus. Renewed Optimism from ongoing US-China negotiations and the latest Trump tariff measures could reshape risk appetite. "Improving trade relations may catalyze capital flows into risk assets," observes Credit Suisse analyst Ipek Ozkardeskaya. This geopolitical undercurrent adds complexity to future rate path projections.

|Square

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