Richmond Fed head signals economic slowdown linked to tariff uncertainty

Thomas Barkin, the head of the Federal Reserve Bank (Fed) of Richmond, spoke to Bloomberg Television about why the US economy is slowing down. He pointed out that business leaders, up against mounting uncertainty surrounding trade policies, have decided to stop new hiring and postpone long-term investment decisions.

Such a cautionary stance of companies is seen despite stable macroeconomic indicators. Recent statistics reveal a consistent trend. Unemployment figures are quite low now, while inflation is gradually falling towards the central bank’s 2% target. The ambiguity over Trump’s tax reforms and trade agreements has already made entrepreneurs hesitant, causing them to adopt a wait-and-see approach that could further threaten economic growth. 

Given the current outlook, the Fed decided to hold off on new interest rate cuts this month. The aftereffects of pristine factors are still hard to assess, therefore no monetary shifts in the US are expected in the coming month.