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重磅决议前“新美联储通讯社”放风:关税是未来联储行动的关键不确定因素

Before the significant resolution, the 'New Federal Reserve News Agency' hinted that tariffs are a key uncertainty for future Federal Reserve actions.

wallstreetcn ·  Jan 29 00:05

An article by Timiraos states that it is widely expected that the Federal Reserve will pause interest rate cuts at this week's meeting, and when or whether the Federal Reserve will resume rate cuts largely depends on the inflation outlook, which may be affected by tariffs. The Federal Reserve's response to tariffs this time may differ from that during Trump's first term. The USA has just gone through high inflation, making businesses and consumers more sensitive to price pressures, and once inflation expectations rise, there could be sustained higher price growth in the future.

On January 29, Wednesday, Eastern Time, the Federal Reserve is set to announce the decision from its first monetary policy meeting of the year. The day before this critical decision is announced, Nick Timiraos, a veteran Federal Reserve reporter known as the "New Federal Reserve News Agency," hinted that the Fed will temporarily pause, and that tariffs will be a difficult and uncertain key influencing factor if cuts to interest rates are to occur in the future.

Timiraos' article on Tuesday was directly titled "Why Tariffs Are a Key Uncertain Factor Facing the Federal Reserve." At the beginning of the article, it stated that as Trump considers using tariffs more boldly, the Federal Reserve faces a crucial question regarding how much prices will rise and how this will intensify public expectations of rising inflation.

Later, the article stated that the outside world generally expects the FOMC meeting of the Federal Reserve, concluding on Wednesday, to decide to maintain the current policy interest rate unchanged, effectively pausing after three consecutive meetings where rates were cut.

"When or whether the Federal Reserve will resume cutting rates largely depends on the inflation outlook, which may be affected this year by Trump's potential follow-through on his threatened increase in tariffs. Tariffs remain a key uncertain factor affecting the Federal Reserve's outlook, as people worry that tariffs could impact businesses' and consumers' expectations of future inflation."

Timiraos noted that the Federal Reserve considers inflation expectations to be at the core of the inflation generation process, which means how the Trump administration implements tariff hikes could influence how Federal Reserve officials set interest rates. Once inflation expectations rise, future price increases could continue at a higher rate.

Timiraos believes that compared to Trump's first presidential term, the inflationary pressures resulting from this trade war are much more complex for the Federal Reserve. The Fed's response to tariff increases may differ from that in Trump’s first term due to the recent years of high inflation in the USA. He cited the views of Steven Kamin, a former Federal Reserve economist who was responsible for the Fed's international finance department during Trump's first term, stating that price setters and payers are now more sensitive to price pressures than they were in 2018.

Kamin expects that the Federal Reserve will be "more inclined to resist tariff increases" this time than during Trump's first term, and if tariffs are imposed, the Fed will keep interest rates at a higher level than they would be without tariffs.

In other words, if tariffs are imposed, the expectations for the Federal Reserve to lower interest rates will be affected. He also stated that since the Fed rarely adjusts interest rates based on policy outcomes that have not yet occurred, it is unlikely to react before tariffs are actually raised.

Earlier on Tuesday, Wall Street Journal mentioned that after the U.S. Senate confirmed Scott Bessent as Secretary of the Treasury on Monday evening, reports surfaced that Bessent is pushing for a tariff plan to start with a 'universal tariff' at an initial rate of 2.5%, increasing by 2.5% each month to give businesses time to adjust, while countries will also have the opportunity to negotiate with the Trump administration, with the highest tax rate reaching up to 20%.

Since Trump took office, China has repeatedly expressed its position on the U.S. potentially imposing tariffs. According to Xinhua News Agency, on the first day of Trump's presidency, no immediate tariff increases were mentioned, but the next day he stated that a 10% tariff on China could begin on February 1. Following this, on January 23, China's Ministry of Commerce spokesperson He Yadong responded last Thursday that China's position on tariffs has been consistent; tariff measures are detrimental to both China and the USA, as well as to the entire world.

He further stated that China is willing to jointly promote the development of Sino-U.S. economic and trade relations towards a stable, healthy, and sustainable direction, based on principles of mutual respect, peaceful coexistence, and win-win cooperation.

According to CCTV, in response to Trump's statement of preferring not to impose tariffs on China while also saying that tariffs are a 'very powerful' method against China, Chinese Foreign Ministry spokesperson Mao Ning reiterated last Friday that China's position is that Sino-U.S. economic and trade cooperation is mutually beneficial. If there are differences and friction between both sides, they should be resolved through dialogue and consultation. There are no winners in a trade war or tariff war, which does not serve the interests of any party and is detrimental to the world.

Editor/danial

The translation is provided by third-party software.


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