Federal Reserve cuts US growth forecast as Trump tariff fears increase

The US Central Bank has cut its development forecast as it warns that President Donald Trump’s tariffs “clearly” were raising prices.

The Federal Reserve on Wednesday released its estimates for the world’s largest economy, while retaining the interest rates again, wanted to see how the policies of the White House come out.

The decision, which was widely expected, was kept around around 4.3%of the benchmark interest rate of the Federal Reserve, where it stands since December.

After the announcement, Trump, who has previously criticized the central bank, called for a cut in rates.

The US President said on his platform Truth Social, “Fed cutting rates will be much better because American tariffs start infection in the economy.”

“Do the right thing. 2 April is the liberation day in America !!!”

Earlier, Fed president Jerome Powell stated that the economy still appeared healthy, despite a sharp decline in emotion and “remarkably high” uncertainty.

But he warned the tariff – which are taxes on imports – Given the recent data, showing an increase in the prices of goods, there was a possibility of increasing the bank’s efforts to keep the prices stable and obstructing the bank’s efforts.

“Clearly something, a good part of it, is coming from the tariff,” he said, speaking after the announcement of the Fed rates on Wednesday.

“Pragati is probably delayed for time,” he said.

Since assuming office in January, Trump has announced a new tariff from Blitz, while also called for a big cut for taxes, regulation and government expenses.

Economists have long warned that some of those policies may increase prices, at least in short -term, and increase uncertainty for businesses.

Analysts say that concerns have also helped run sales in the stock market, S&P fell 10% from February 500 to previous levels in September at previous levels.

Trump has admitted that there may be “Slight disturbances” from your tariffBut it is said that policies will lead to long -term development.

Dynamic has added challenges to the Fed, which has spent in the last three years trying to keep prices stable and avoid economic recession.

Mr. Powell said that the bank was assuming that the tariffs would cause a once jump in prices rather than more constant growth, but it is also working for a hit for development.

The forecasts showed that policy makers now hopes that inflation would stand at 2.7% later this year, from 2.5% in December.

They are expecting just 1.7% growth this year, which is already below the estimated 2.1%.

Although it kept the interest rates unchanged on Wednesday, forecasts suggest that the bank still expects to cut rates by the end of the year.

Fed also said that it would slow down in such a trick, such as government debt, such as government debt, which effectively provides more support for the economy.

Whitney Watson, a global co-head and co-main investment officer of fixed income and liquidity solutions at Goldman Sachs Asset Management, said, “For some time, Fed Wet and C mode is in, because it monitors whether the recent development recently develops some more serious.”

The leading stock index in the US increased after the announcement, with the S&P 500 closed with more than 1%.

Kevin Haset, director of the National Economic Council, a policy branch of the US government, dismissed concerns about the impact of the tariff.

“Chairman Powell is clear that if there was a tariff effect, it is a fleeting,” he said, he said “he respected Fed’s freedom, as we all do inside the White House”.

In 2022, the fed hiked browing costs considerably, aims to cool the economy and reduce the pressure to increase prices.

Inflation, the rate of price increases, has fallen to 2.8% by February, but is above the 2% target of the bank.

Recent surveys also suggest that public sentiment has sinks, while inflation expectations have increased, which can stabilize the bank’s job prices.

Families expected to increase prices are now encouraged to buy. But this can fuel inflation, as the firms responded to the increased demand by increasing prices.

Quilter’s investment strategist Lindsay James said, “The US problem is that inflation remains a primary risk and consumer expectations signs are becoming involuntary with 2% target.”

“The main indicators of demand may slow down in the US, but inflation persists and if the proposed economic policies continue, there is a risk of splening.”

Mr. Powell said that the bank was watching those surveys closely, but the evidence was not seen in the “hard data” to create an alarm about the economy yet.

“We are well deployed to wait for further clarity and not in any hurry,” he said.

Additional Reporting by Burn Debssman Junior and Joao da Silva