Macro Minutes The Aftermath
Feb 4, 2025
Blake Gwinn, Head of US Rates Strategy at RBC Capital Markets, shares his expertise on the implications of recent US tariffs on Canada, Mexico, and China. The discussion highlights the Fed's cautious stance on monetary policy amidst inflation concerns and economic uncertainties. Gwinn delves into the currency fluctuations resulting from tariffs and the corresponding responses from central banks like the BoC and ECB. The conversation also touches on the delicate balance central bankers must maintain between tackling inflation and fostering economic growth.
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Fed's Tariff Uncertainty
- The Fed is uncertain about the long-term effects of tariffs and will closely monitor data.
- They're more concerned about uncertainty's impact on business decisions than direct price increases.
Fed's Priorities
- The Fed is more likely to react to growth and labor market impacts than inflation from tariffs.
- Global growth slowdown and financial conditions are also key factors influencing their decisions.
BOC Outlook
- The Bank of Canada (BOC) expects solid growth and inflation near 2% despite tariff concerns.
- Their decision to cut rates depends on the degree of retaliation from the U.S.