Fidelity Bond Chief: Tariffs Put the Federal Reserve in a Dilemma
According to news on May 16, the head of Fidelity's $2.3 trillion fixed income business stated that as Trump's trade war disrupts the economic outlook, the Federal Reserve policymakers' goal of curbing inflation while maximizing employment is “pulling them in completely different directions.” Robin Foley remarked that the Federal Reserve's “efforts to combat inflation are good, but employment remains to be seen.” She added that the central bank is in a “predicament.” Foley made these comments as the Federal Reserve has paused its interest rate cuts scheduled to begin in 2024, as Trump's tariffs could exacerbate inflation and hurt the job market. Foley pointed out that over the past year, market participants have seen “very unstable” changes in interest rate expectations. Trading in the futures market indicates that investors expect the Federal Reserve to resume rate cuts in September, which is much later than earlier predictions this year. (Financial Times)
