UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'The wider politics of price rises'
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Feb 12, 2025 Explore the upcoming US consumer price inflation data and its political implications. The discussion highlights how tariff policies impact public perception, especially regarding food prices. Learn about the Federal Reserve's strategies on interest rates and what that means for financial regulation. Additionally, hear insights on how international investors are reacting to these economic shifts.
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Inflation Perception vs. Reality
- US January CPI data is less about the numbers and more about public perception.
- President Trump's trade taxes won't significantly impact inflation immediately.
Food Prices and Inflation Perception
- Food prices, especially visible ones like eggs, heavily influence consumer inflation perception.
- This perception can restrict taxing imports from countries like Canada and Mexico.
Tariff Retreats and Visible Inflation
- Trump has retreated on tariffs where inflation consequences are highly visible.
- For example, a tax on Mexican goods would increase avocado prices, upsetting Gen Z.