UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'US inflation in isolation'
Jul 31, 2025
The latest discussion sheds light on the Federal Reserve's stance on interest rates, revealing some internal dissent among its members. Fed Chair Powell's remarks are dissected, emphasizing their hawkish tone and the influence of potential trade tax inflation. The conversation delves into how rising trade taxes could impact consumers, drawing on historical trends. Overall, there's an intriguing focus on the resilience of American consumers amid these economic changes.
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Fed Dissent Likely Political Signal
- The Federal Reserve's two dissenters appeared driven by political signaling rather than purely economic rationale.
- Fed Chair Powell emphasized uncertainty about inflation and the looming growth slowdown in the US economy.
Unpredictable Trade Taxes Hit Consumers
- US trade tax policy is increasingly unpredictable, resembling a "random number generator".
- The general trade tax burden on consumers is now the highest since 1935, significantly impacting the economy.
Global Inflation Trends and Timing
- Inflation data from Europe is expected to show slight decreases due to disinflationary pressures.
- US inflation may rise slightly, with trade taxes minimally impacting June figures, becoming more visible by September.