The US Federal Reserve is “absolutely” prepared to intervene to help calm nervous financial markets, a senior central bank official said on Friday, after US President Donald Trump’s tariff plans roiled Wall Street.
The US president on April 2 announced sweeping import taxes on dozens of countries, only to abruptly, temporarily roll many of them back to 10 percent last week in response to turbulence in the stock and bond markets, while leaving China with new tariffs totaling 145 percent.
The Fed would “absolutely be prepared” to deploy its various tools to help stabilize the financial markets if the need arose, Boston Fed President Susan Collins told the Financial Times in an interview published on Friday.
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Any intervention by the Fed would depend on “what conditions we were seeing,” added Collins, who is one of 12 voting members of the Fed’s all-important rate-setting committee this year.
“The higher the tariffs are, the more the potential slowdown in growth as well as elevation and inflation that one would expect,” Collins said in a separate interview with Yahoo Finance earlier on Friday, adding that she expects inflation to rise “well above” 3 percent this year, but no “significant” economic downturn.
Since Trump’s tariffs came into effect earlier this month, Fed officials have been more outspoken than usual about the effects of the government’s plans on inflation and growth. A widely referenced consumer sentiment survey published on Friday by the University of Michigan showed a sharp drop in consumer confidence, and flagged another worrying rise in both short-term and longer-term inflation expectations.
For now, the survey on inflation expectations remains an outlier, with financial market measures of inflation expectation still largely pricing in a long-term path closer to the Fed’s two percent target.
In a speech in Hot Springs, Arkansas on Friday, St Louis Fed President Alberto Musalem said “continued vigilance” and “careful monitoring” of the incoming data was needed.
Musalem, a voting member of the Fed’s rate-setting committee this year, said that while he still expects a “moderate” pace of economic expansion, the near-term risks were “skewed” toward rising inflation, slower economic growth and a cooler labor market.
“I would be wary of assuming the impact of high tariffs on inflation would be only brief or limited,” he said.
On a busy day of speeches from central bank officials, New York Fed President John Williams went further than his colleagues on the bank’s rate-setting committee, putting out estimates of how he expects Trump’s immigration and tariff policies — and the uncertainty surrounding them — to affect the US economy this year.
“I now expect real GDP growth will slow considerably from last year’s pace, likely to somewhat below one percent,” he told a conference in Puerto Rico.
“With this downshift in the pace of growth ... I expect the unemployment rate to rise from its current level of 4.2 percent to between 4.5 and 5 percent over the next year,” he said.
Williams added that he expected increased tariffs to “boost inflation this year to somewhere between 3.5 and 4 percent” — well above the bank’s long-term target.
TARIFFS: The global ‘panic atmosphere remains strong,’ and foreign investors have continued to sell their holdings since the start of the year, the Ministry of Finance said The government yesterday authorized the activation of its NT$500 billion (US$15.15 billion) National Stabilization Fund (NSF) to prop up the local stock market after two days of sharp falls in reaction to US President Donald Trump’s new import tariffs. The Ministry of Finance said in a statement after the market close that the steering committee of the fund had been given the go-ahead to intervene in the market to bolster Taiwanese shares in a time of crisis. The fund has been authorized to use its assets “to carry out market stabilization tasks as appropriate to maintain the stability of Taiwan’s
STEEP DECLINE: Yesterday’s drop was the third-steepest in its history, the steepest being Monday’s drop in the wake of the tariff announcement on Wednesday last week Taiwanese stocks continued their heavy sell-off yesterday, as concerns over US tariffs and unwinding of leveraged bets weighed on the market. The benchmark TAIEX plunged 1,068.19 points, or 5.79 percent, to 17,391.76, notching the biggest drop among Asian peers as it hit a 15-month low. The decline came even after the government on late Tuesday authorized the NT$500 billion (US$15.2 billion) National Stabilization Fund (國安基金) to step in to buoy the market amid investors’ worries over tariffs imposed by US President Donald Trump. Yesterday’s decline was the third-steepest in its history, trailing only the declines of 2,065.87 points on Monday and
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
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