Trump's tariff policy puts US Fed on high alert — Reuters

Since Donald Trump's re-inauguration as US president in January 2025, the country's central bank has been grappling with the uncertain consequences of his ambiguous trade policy. At its May meeting, the regulator kept interest rates in the same range of 4.25% to 4.50% and indicated its intention to maintain a wait-and-see approach further, Reuters says.

With the new president’s import tariffs taking effect, the Federal Reserve (Fed) projects inflation could rise by 2 percentage points and US consumption to decline by 1%. However, business surveys indicate that the higher costs and reduced demand triggered by trade barriers have not yet significantly impacted employment. This allows the central bank to hold rates steady.

The president’s unpredictable behavior has kept Fed officials on high alert, closely monitoring any changes. Additionally, they have to track not only Donald Trump’s decisions, but also possible retaliatory measures from other countries, Reuters stresses.