The Federal Reserve is in no hurry to lower interest rates again, its Chairman said following President Trump’s announcement of tariffs on metal imports worldwide.
Jerome Powell emphasised that there is no immediate need to reduce borrowing costs, noting that the American economy remains “strong overall.” At a Senate Banking Committee hearing, he remarked, “The economy is strong overall and has made significant progress toward our goals over the past two years.” He warned against rushing to adjust the policy stance, explaining that cutting policy restraint too quickly or extensively could derail efforts to manage inflation.
With inflation rising to 2.9% in December—well above the Fed’s 2% target—economists have cautioned that the new tariffs could exacerbate price pressures.
On Monday, President Trump announced a 25% tariff on US steel and aluminium imports. Powell acknowledged the “risks and uncertainties” introduced by these broad new import taxes imposed by the administration.
A leading European bank has warned that the trade war between America and Europe is set to intensify. In comments from ING, Inga Fechner and Ewa Manthey noted that “a clash with Europe is inevitable” as President Donald Trump escalates tariffs on the EU and other nations. They emphasized, “President Trump has laid the foundations for further trade escalations. This won’t be the last tariff move—retaliation is coming, and it’s going to get nasty.”
The European Commission has also signaled its readiness to respond, stating, “The EU sees no justification for the imposition of tariffs on its exports. We will react to protect the interests of European businesses, workers, and consumers from unjustified measures.”
German Chancellor Olaf Scholz reinforced this stance by warning, “Anyone who imposes tariffs must expect counter-tariffs.”
Meanwhile, President Trump has hinted at additional tariffs on the EU and plans to soon impose reciprocal measures against all countries that levy tariffs on the United States. Last night, he confirmed that a blanket 25% tariff would be applied to steel and aluminum imports, including those from Europe.
Trump has frequently criticized the European Union, arguing that “they don’t take our cars, they don’t take our farm products. They take almost nothing, and we take everything from them.”
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