Donald Trump, who took office promising to tackle inflation, is now facing the same challenges as his predecessor Joe Biden. While some indicators suggest inflation pressures are declining, the Federal Reserve’s decision to halt interest rate-cutting cycle has raised concerns about reflation and Trump’s policies.
Trump is determined to play his “America first” agenda, including tariffs on Canada and Mexico, followed by China and other trade partners. However, investors are factoring in escalation risks, as suggested by the Fed’s hawkish tone on inflation. The odds of a rate cut before mid-year have fallen, with some forecasting firms expecting Trump’s policies to push real GDP growth from 2.5% to less than 2% by the second half of 2025.
Consumers also expect higher inflation, with a recent survey showing a jump to 5.3% a year from now. The Conference Board’s latest monthly survey indicates that confidence has dropped to the lowest level in four months, with Americans worried about a tightening job market.
Trump is unhappy with the Fed’s decision to stop cutting interest rates, and instead of easing these worries, he seems determined to use his full “America first” hand while letting the threat of ruinous tariffs and mass deportation hang over markets. Markets are eagerly waiting for Trump to unleash his economic agenda, but investors need to see it happen to ease concerns about a potential recession.
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Source: https://finance.yahoo.com/news/this-week-in-trumponomics-bidenflation-is-now-trumpflation-150001888.html