Bloomberg Daybreak: Asia Edition Fed Holds Rates, Signals Higher Prices are Coming Due to Tariffs
Jun 19, 2025
Mark Cranfield, a Bloomberg MLIV Strategist in Singapore, and Betsey Stevenson, a Professor at the University of Michigan and former Chief Economist at the U.S. Department of Labor, discuss the latest Federal Reserve decisions. They reveal how the Fed's pause on interest rate hikes amid rising tariffs suggests inflation is looming. The duo explores the potential impact of geopolitical tensions, especially with Iran, on the global economy, and delves into consumer anxieties over job security and spending as economic uncertainties rise.
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Fed Faces Stagflation Challenge
- The Fed balanced policy carefully amid global uncertainties and maintained market stability.
- They warned of a worsening stagflation with higher inflation despite slower growth forecasts.
US Dollar Loses Haven Status
- The US dollar is losing its safe-haven appeal as investors seek alternatives like the euro and yuan.
- Rising European defense spending and China's currency stability attract more investment away from the US dollar.
US Treasury Holdings Show Risk
- Rising holdings of US Treasuries by UK hedge funds signal more volatile, short-term investments.
- Concerns grow over US fiscal deficits and potential further sovereign credit rating downgrades.