EU poised to impose €21 billion tariffs on U.S. if no trade deal, Tajani says
Investing.com - Wells Fargo has slashed the amount it expects the Federal Reserve to ease interest rates by this year, flagging that the impact of sweeping U.S. tariffs has yet to be determined.
In a note to clients, the analysts said they now anticipate that the Fed -- which is tasked with helping both maximize employment and corrall inflationary pressures -- will lower interest rates by 75 basis points by the end of 2025, down from a prior outlook of 100 basis points.
"Price data are only beginning to reflect tariff-related costs and the degree of persistent price growth remains an open question," the analysts wrote.
"Hiring also remains stable, suggesting the timing and degree of Fed easing may be pushed out and scaled back."
However, they added that there is still a chance that the central bank could reduce borrowing costs from their current range of 4.25% to 4.5% at its September meeting "if the labor market stumbles in the next month or so."
Broader growth is also anticipated to slow as businesses and consumers rein in spending in response to uncertainty over the trajectory of Trump’s aggressive tariff drive.
Although Trump has delayed most of his punishing "reciprocal" tariffs on a host of countries, it is still unclear if the White House will be able to secure a series of fresh trade deals prior to the expiration of the pause early next month. Trump has hinted at a willingness to possibly extend the postponement, saying on Wednesady that negotiations were ongoing with 15 countries.
Despite worries over the possible effect of Trump’s tariff agenda on inflation, U.S. consumer prices rose at a slower-than-anticipated annualized pace in May.
The Labor Department’s consumer price index increased by 2.4% year-over-year last month, accelerating from 2.3% in April but cooler than expectations of 2.5%. On a monthly basis, the measure eased to 0.1%. Economists had projected that the gauge would match April’s reading of 0.2%.
An uptick in shelter costs underpinned much of May’s increase, although this was offset by falling gasoline prices that dragged energy expenses down 1%, the Bureau of Labor Statistics said in a statement.