Inflation Anxiety: Fed's Balancing Act Under Tariff Uncertainty

The U.S. Federal Reserve's March meeting highlighted concerns over inflation risks and slower growth, especially in light of new tariff plans. Policymakers warned of 'difficult tradeoffs' for the central bank. Trump-induced market volatility sharpened these concerns, leading to adjusted forecasts for growth and interest rate plans.

The U.S. Federal Reserve's latest meeting minutes reveal deep-seated concerns about the future trajectory of the American economy. With rising inflationary pressures and decelerating growth on the horizon, Fed officials expressed unease over 'difficult tradeoffs' they might soon encounter.

The March meeting took place shortly after the Trump administration announced tariffs that clouded economic predictions. As a result, participants advocated for a cautious approach, suggesting that interest rates might stay elevated longer should inflation persist, or be slashed if the economy slowed significantly.

Subsequently, Trump's introduction of broader import taxes rattled markets. However, when he paused the new levies for 90 days, market indexes bounced back over 6%, underscoring the uncertainties previously highlighted in the Fed's deliberations.

(With inputs from agencies.)