Trump trade uncertainty ties Fed’s hands on rate cuts

Federal Reserve Bank of Minneapolis President Neel Kashkari stated that uncertainty surrounding US trade and immigration policies is hindering the central bank's ability to decide on interest rate cuts. He said Trump's negotiations with multiple countries are making it hard to predict the economy.

Kashkari notes that President Trump’s tariff policies, including new potential duties on EU goods, are weighing on American GPD growth. Meanwhile, the country is experiencing a business activity slowdown driven by corporate investment hesitancy. The official warns that the delayed effect of these measures could materialize as reduced consumer spending by early fall.

The President of the Minneapolis Fed emphasized that the regulator is closely monitoring economic conditions and maintaining a wait-and-see approach, refraining from any interest rate changes until September. The central bank will only make policy decisions after receiving clearer signals about the outcomes of trade negotiations and their impact on the nation's economic data.