Chicago, US:
Since the ripple effects of the global trade war of US President Donald Trump are felt in countless industries, FED chairman Jerome Powell warned of higher inflation on Wednesday (local time) and said that policy changes under the Trump government have placed the Federal Reserve in Uncharted Waters.
In a speech in Chicago, Powell noted that the level of the tariff increases that the Trump administration has so far announced is “considerably greater than expected” and the persistent uncertainty surrounding the issue of permanent economic damage.
“These are very fundamental policy changes … There is no modern experience to think about this,” said Powell.
The FED has the task of promoting full employment and to keep inflation under control, but Powell warned that Trump’s rates threat both goals. The US economy remains in a considerable form, according to the latest data.
Powell noticed a slowing economy, but he added that “inflation will probably rise because rates find their way and some of those rates are paid by the public.”
He also noticed the “volatility” on the markets in a “time of high uncertainty”.
Trump’s trade war affects shares again
That volatility was visible on Wall Street, where the Nasdaq dropped more than four percent at some point, the S&P more than three percent and the Dow Jones more than two.
Leading the downward cargo was Nvidia, who temporarily fell more than 10 percent after announcing major costs due to new export restrictions on semiconductors imposed as part of Trump’s struggle with China.
Trump remains cheerful
In the meantime, the American president remained cheerful and posted on social media that there had been “great progress!” In conversations with Japan about a trade agreement.
He is banking that his strategy, in which rates are intended to lead to several individual country agreements, will lower the barriers to American products and shift global production to the United States.
But those negotiations run parallel to an in -depth confrontation with the top of the US economic rival China – and concern about widespread disturbance.
China’s ‘no winner’ warning
While the rest of the world has been beaten with a blanket of 10 percent rate, China stands for taxes up to 145 percent on many products. Beijing has responded with tasks of 125 percent on American goods.
“If the US really wants to solve the problem through dialogue and negotiations, it should stop extreme pressure, stop threatening and blackmailing and talking to China on the basis of equality, respect and mutual benefit,” said the Chinese spokesperson for the Ministry of Foreign Affairs Lin Jian.
“There is no winner in a tariff war or a trade war,” Lin said, adding: “China doesn’t want to fight, but it’s not afraid to fight.”
China said on Wednesday that it saw a predictive 5.4 percent in growth in the first quarter when exporters hurried to get goods from the factory gates for the American charges.
#American #central #bank #chief #Trump #rates