FT News Briefing Swamp Notes: The Federal Reserve’s tariff dilemma
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Apr 12, 2025 
Chris Giles, an economics commentator for the Financial Times, and Claire Jones, the incoming U.S. economics editor, tackle the Federal Reserve’s tightrope walk amidst President Trump's trade wars. They dissect how tariffs create inflationary pressures even as consumer prices dropped. The discussion focuses on Chair Jay Powell’s tough choices: prioritize economic growth or keep inflation in check. They also highlight the broader impacts of these decisions on everyday Americans and the Fed's cautious approach to interventions.
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The Fed's Dilemma
- Trump wants lower interest rates based on better inflation figures.
- The Fed is hesitant due to sticky inflation and potential second-round effects of tariffs.
Trump's Stance on Rates
- Trump, being an old real estate man, always favors lower interest rates.
- The Fed worries about potential second-round effects like wage increases due to tariff-induced price rises.
Impact of Tariffs on Investment
- Trump's tariff policies create uncertainty for businesses considering investments in U.S. manufacturing.
- An interest rate cut might help marginally, but policy clarity is more crucial.