LIVE MARKETS-Fed may still be able to cut rates this year despite tariffs
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FED MAY STILL BE ABLE TO CUT RATES THIS YEAR DESPITE TARIFFS
Tariffs being proposed under the Trump administration are more likely "targeted measures rather than blanket levies," and so the broad U.S. disinflation trend should still advance and allow the Federal Reserve to resume cutting rates later this year, Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, writes in a note Thursday.
The Fed minutes Wednesday showed that Trump's initial policy proposals stoked concern at the U.S. central bank about higher inflation, with firms telling the Fed they generally expected to raise prices to pass through the cost of import tariffs.
The U.S. central bank held interest rates steady last month and Fed Chair Jerome Powell said there would be no rush to cut them again.
"While the Fed is in no rush to cut interest rates further in the near term, we think the central bank will find itself in a place to do so later in the year as inflation moderates over time despite selective tariffs," Marcelli writes.
According to the note, January's consumer inflation rose more than expected while shelter inflation has continued to moderate.
"With rising housing supply and slower rent growth in
real-time data, we expect overall inflation to trend lower in the months ahead."
The firm also thinks the Trump administration will not want to risk higher inflation through "broad and sustained tariffs" and potentially jeopardize the U.S. economy.
(Caroline Valetkevitch)
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FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
CONCERNED ABOUT INFLATION? TURN TO THESE ASSETS SHORTER-TERM, AND LONGER-TERM - CLICK HERE
MEXICO, THAILAND, MALAYSIA MOST AT RISK AMONG EMERGING MARKETS FROM US TARIFFS - CLICK HERE
THURSDAY DATA: JOBLESS CLAIMS, PHILLY FED, LEADING ECONOMIC INDEX - CLICK HERE
NAVIGATING THE MARKET MAZE: S&P 500, TRUMP POLICIES AND MAG 7 - CLICK HERE
US INDEXES FALL EARLY AS WALMART FORECAST DISAPPOINTS - CLICK HERE
TECH VS FINANCIALS: THIS DOGFIGHT IS GETTING INTERESTING - CLICK HERE
UBS EXPECTS BOE TO DELIVER ONLY THREE RATE CUTS THIS YEAR AFTER DATA - CLICK HERE
CHINA STOCKS HAVE MORE ROOM TO RUN, SAYS MORGAN STANLEY - CLICK HERE
IS THE RALLY IN CEMENT STOCKS BUILT ON SHAKY FOUNDATIONS? - CLICK HERE
GERMAN DEBT BRAKE: DON'T FORGET THE ESCAPE CLAUSE - CLICK HERE
EUROPEAN SHARES MIXED, DEFENCE STOCKS TAKE A BREATHER - CLICK HERE
EUROPE BEFORE THE BELL: UKRAINE, TARIFFS, EARNINGS IN FOCUS AS FUTURES INCH UP - CLICK HERE
GOLD AND YEN BASK IN THE LIMELIGHT - CLICK HERE
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