US $ China tension pad cut for cutting rate


Meridian, Mississippi / San France, May 10 (Reuters) – Donald trump's decision to raise tariffs on $ 200 billion worth of imported Chinese products fueled Friday speculation about the possibility of a Canadian Canadian Federal Reserve's end-of-year cap on a Canadian Federal Reserve. The case that a head of the central bank does not exclude if the economic situation deteriorates.

The Fed announced in January that it plans to leave rates unchanged until 2020 to allow time to assess the impact of times of contradictory factors, including lower-than-expected inflation, but also growth and job creation higher than expected.

Donald Trump and some other top US troops. There. Politicians have repeatedly called the central bank to lower rates to increase growth, which should decelerate in the second quarter after reaching 3.2% annually over the first three months of the year. Year.

Friday, the Fed Chairman of the Regional Atlanta Office, Raphael Bostik, did not argue that the rise in tariffs eventually justified such a cut.

"It is possible, depending on the severity of the reaction," he told reporters. "It will depend on what companies decided to do and it will depend on how long the tariffs are in effect."

The March forecast released by the Fed suggests that the majority of its leaders expect rate stability until the end of the year. And earlier this month, the chair of the institution, Jerome Pavell, said recent low inflation was a temporary factor and reiterated that there was no urgent need to raise or lower rates.

US $ There. Consumer price data released on Friday remains the facto contained.

Short term Paris

With the entry into force on Friday of 25% pay on $ 200 billion of Chinese products, interest rate interest rate markets have begun to reintegrate into the courts, with the possibility of 1/4 declining Fed cash rate target by the end of December.

The Fed is currently targeting a federal cash rate of 2.25% and 2.50%, a level that estimates do not stimulate or increase growth.

A majority of observers expect US dollar. There. Importers to submit tariff increases on their selling prices, which would lead to higher consumer prices in the months to come.

Logically, such a price increase should dismantle the Fed of reducing rates, but in this case, the probability of a decline may be increased. Analysts believe that tariff increases should only be temporary and that the Fed will likely choose to ignore them.

Bart Hobin, a professor of economics in Arizona State University, recently co-authored a study with San Francisco Fed researchers concluding that inflationary noticeable but transitory effects of tariff increases.

What is Impact on Consumption?

However, the impact on consumer spending and growth may be more pronounced, especially if the US economy is to be over. There. China's relations continue to deteriorate, and if the tramp management puts its threat to extending the taxation of Chinese billions of dollars in trade that are spared for the time being.

For TD Securities Analyst Michael Hanson, the Fed should not lower rates on a preventive base, but should wait for no considering signs of slowdown, whether they are concerned with international trade or consumption, and employment in the United States. .

If this is the case, he'll have the fat to react by engaging in a new cycle of course cuts. He adds, however, that this hypothesis is not the preferred scenario.

Not all analysts are so worried. Bart Hobijn explains that consumers will spend their expenses on price changes by referring to cheaper products. "The magnitude of this substitution movement is difficult to predict but it will sometimes offset the inflationary and contractional effects of tariffs," he says.

New York Fed President John Williams also wanted to relay the impact of customs duties on Friday.

"Tents remain a problem," he said, expecting the US economy to grow by about 2.25 percent this year, believing its long-term trend.

His Atlanta counterpart, Raphael Bostik, said he would start his day Monday by studying the potential impact of tariff growth on GDP growth.

With Trevor Hunnarnik;
Marketplace for French service

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