- There’s any number of directions tariff rates could go—a small increase, a big increase, no increase—from here forward. And depending on that, there’s a lot of different directions that monetary policy could go.
- Given the experience of the last couple of years, people are now paying more attention to inflation and that means that this one-time increase could actually turn out to be more of a prolonged impact.
- It’s pretty unambiguous that tariffs have a negative impact on real GDP.
Ivanna Hampton: Fed Chair Jerome Powell says high uncertainty is behind the move to keep interest rates where they are. Still, he stressed at the Fed’s March meeting that the economy is still solid. Joining me to talk about the meeting is Preston Caldwell. He’s a senior US economist for Morningstar Investment Management.
Thanks for being here, Preston.
Preston Caldwell: Thanks for having me, Ivanna.
Did the Fed Cut Interest Rates?
Hampton: What did you make of the Fed’s decision to hold interest rates steady and pencil in two cuts for 2025?
Caldwell: Well, I mean, virtually everyone expected no cut today, but everyone was looking at what they would be penciling in for the rest of this year, so they left their forecast unchanged compared to the prior projections back issued last December. I guess that was a little surprising, just given that probably the probability of tariff hikes have increased compared to those prior projections. So I think most people would have thought that the Fed would have made some sort of an adjustment for that, which they have, to some extent. There’s a few other moving pieces. […]
— Read More: www.morningstar.com
