Washington (Washington Insider Magazine) – A Federal Reserve report from Wednesday indicates that economic stagnation coupled with rising prices has become the primary economic trend during recent weeks because of President Donald Trump’s unpredictable trade policy approach.
The March issues in employment and growth based on the Beige Book observations from the Fed stood unchanged, although businessmen and household members expressed growing worry about escalating trade tensions.
Tariff Chaos Rattles Economy
Trump’s aggressive trade policy enforcement has resulted in a policy dilemma for the Federal Reserve System, as explained by Fed Chair Jerome Powell. The central bank indicates that rising tariffs create separate challenges of rising inflation and growth slowdown that cannot be regulated by current Federal Reserve interest rate policies at the same time.
“Every business owner I talk to is paralyzed,”
said Atlanta Fed President Raphael Bostic, echoing concerns in the report about frozen investment decisions.
“When you don’t know what the trade rules will be next month, how can you plan expansion?”.
Fed in Holding Pattern
Trump continues to criticize Federal Reserve Chairman Powell through public attacks yet the Fed has decided to remain steadfast in their position. Chicago Fed Economic President Austan Goolsbee pointed out that both the solid 4.2% unemployment figure and 2.3% March inflation level near the Fed’s target make it safe to delay rate changes.
- Various warning signs become visible throughout this report.
- Consumer and business confidence plunging
- Short-term inflation expectations rising sharply
- Supply chains “seizing up” in manufacturing districts
- Retailers reporting customers “pulling back on discretionary spending”
Market Jitters Grow
Financial markets predict Federal Reserve interest rate reduction by June but the officials unanimously agreed to keep rates steady at 4.25%-4.50% during their May 6-7 session.
Federal official Julia Coronado maintains that
“The president wants rate cuts to juice the economy” despite the fact that “his own tariffs are what’s threatening growth.” One requests the fire brigade to extinguish a fire that you remain purposefully stoking.
