Trump's trade policy may complicate US Fed decision-making on rates — YahooFinance

Current tariff policy of US President Donald Trump along with repeated postponements of trade duties implementation creates challenges for the Federal Reserve (Fed). According to YahooFinance experts, the head of state's actions may delay the onset of tariffs' impact on the country's inflation indicators.

Previously, Fed Chair Jerome Powell has repeatedly stated the need for more evidence regarding the impact of trade tensions on pricing. The official also cites tariffs as one of the reasons for the government body's unwillingness to lower interest rates at this time.

Meanwhile, the probability of a borrowing cost reduction in September remains at 69%. According to Ed Yardeni of Yardeni Research, a decline in this indicator could lead to dissatisfaction among bondholders. This, in turn, might trigger a subsequent increase in their yields.

Additionally, CME FedWatch data shows that market participants estimate the likelihood of a rate cut this month at less than 5%. The forecast for September and subsequent periods appears more optimistic, with a 96% probability of monetary easing by December.