Federal Reserve Chair Jerome Powell is unlikely to succumb to President Donald Trump’s persistent pressure to ease monetary policy. The Fed may not even cut rates in September unless inflation eases, as Powell continues to caution on inflation risk.
Though recent inflation data has been tame, the effects of trade tariffs could emerge only in the summer as US businesses are still working through stockpiles of imports. Trump’s tariff deadlines, including the July 9 expiry for renegotiation of his ‘liberation day’ levies, could further escalate price pressures.
Other inflationary factors include the risk of a renewed surge in oil prices as the ceasefire between Israel and Iran remains fragile. Trump’s sweeping tax-cut and spending bill, currently making its way through the Senate, could also push prices higher in the coming months.
This week’s US June jobs data is unlikely to sway the Fed’s stance. The Reuters poll forecasts a 110,000 rise in non-farm payrolls, down from 139,000 in May, with the unemployment rate set to inch higher to 4.3 percent from 4.2 percent. The figures are expected to reflect the effects of tariff uncertainty and large public-sector job cuts under the Trump administration.
