Moneycontrol Pro Panorama | Fed Faces a Dilemma
The US Federal Reserve finds itself navigating a period of uncertainty, largely driven by the evolving policy landscape under President Donald Trump. In response to this ambiguity, the Fed has opted to maintain its benchmark interest rate at 4.25-4.5 per cent. The decision reflects concerns about potential trade disruptions stemming from tariff-related policies, alongside rising inflationary pressures and growing unemployment risks. The cautious approach taken by the Fed was evident in Chairman Jerome Powell’s remarks. While he reaffirmed that the US economy continues to expand at a “solid pace,” he also acknowledged the unpredictability of this growth trajectory. There is lingering uncertainty over whether the current momentum can withstand the headwinds from Trump’s policy shifts. An article in the Financial Times titled “The Fed Digs In” (free for MCPro subscribers) suggests that the central bank may be wary of a potential stagflation scenario. Although the Fed is not forma...
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