• The Federal Reserve “faced a great external shock after the other”, “ Economist Muhammad Al -Arian wrote in a Bloomberg Pillar of opinion. First, inflation was in the epidemic, and now inflation has become a customs tariff. Federal Reserve Chairman Jerome Powell has pressed a pause of monetary policy, but may be forced to take a step.

Federal Reserve Chairman Jerome Powell has a tariff dilemma, and not the only dilemma that the Central Bank has faced in the seven years since his assumption.

“It is easy to think that the Federal Reserve led by Jerome Powell was one of the most ponds,” wrote Mohamed El -Erian, head of Queens College at Cambridge University. Pillar to Bloomberg Tuesday. “From the publication of 2020 and its chaotic effects to economic and financial fluctuations resulting from the current customs tariff, it faced a great external shock after the other.”

But this is not only bad-the federal reserve has made some mistakes. This chaotic epidemic, followed by the aforementioned Erik, included the Powers of naming inflation as “transitional”, only until it became more hot and hotter until it reaches a height of four decades. Once the Federal Reserve finally won the inflation in Tazzam, President Donald Trump Definitions It threatens to raise prices.

The President announced a comprehensive system of customs tariff that sent the escalating stock market, the morale of consumer and commercial, and feeds the recession warnings, followed by chaos in the bond market. This makes the central bank function more difficult. The Federal Reserve is in waiting and vision, but it faces the issue of whether or not interest rates will be reduced. If the economy slows down and unemployment rises, then the Federal Reserve will be expected to reduce interest rates – but if inflation rises, the expectation will be to raise prices.

Al -Bawal pointed out that Powell was with Trump as well. The president continues to invite Powell to reduce interest rates, but this does not seem to be Game plan. Powell, at his press conference after the decision in March and again on Friday, he believed the central bank has a time.

Al-Arian argued that the markets were trained to expect to decrease interest rates as soon as there is a hint of fluctuations, and this may be what tends to do-but it should not. “The Federal Reserve should give a priority to re -inflation to a genie in the bottle,” he wrote, meaning that the central bank should focus on inflation instead of concern about employment, and the other half of its double mandate to maintain stable prices and follow the maximum amount of employment.

He said: “What the Federal Reserve needs more than ever is a good dose of humility, which is something that it lacks in recent years at its expense and the economy, adding later:” It will also help in the face of a long period of inflation. “

However, due to the chaos in the bond market, Al -Iryan He said Wednesday, the Federal Reserve can be forced to act if this chaos persist. The central bank will have to reduce interest rates or use its public budget to compensate for the “bond market malfunction”, but it will come at a cost. Irian did not respond wealth Request more comment.

In the Wednesday note, Jeffrez of the Investment Bank said that the Federal Reserve does not need to intervene immediately, but we are not far from the potential federal reserve intervention. However, the investment bank does not believe that the interest rate in emergency situations is the best step and said that the widespread purchases of treasury bonds should be the last resort.

Powell may be on something: the Federal Reserve may have time to move more than expected. President Declare A temporary for 90 days stopped on a wide tariff on Wednesday afternoon, regardless of 10 % blanket tax.

This story was originally shown on Fortune.com

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2025-04-09 17:49:00