Things are getting awkward for the US Federal Reserve. With their eye on inflation, officials are inclined to hold rates steady when they meet in Washington on Tuesday and Wednesday. But fears of a slowdown are mounting, and President Donald Trump and some of his deputies keep hammering the central bank for a rate cut.
Caught in that bind, Fed chief Jerome Powell may have been comforted by govt data on Friday showing a healthy 177,000 jump in April payrolls. As long as the labour market holds firm, the Fed can more easily justify standing pat.
Meanwhile, the Fed’s favored inflation gauge showed price pressures continued to slowly ease. While Powell & Co would typically welcome such a cooling, higher US duties on imports risk upending the progress they’ve made on inflation.
Uncertainty is the dominant factor now for major central banks around the world. The White House is pursuing deals on the tariff front that could once again shift the landscape, a nightmare for anyone trying to forecast future economic conditions.
The European Central Bank has continued to cut rates in anticipation of continued disinflation and weaker growth caused by US tariffs. But euro-area inflation unexpectedly held steady.