With the latest on Trump tariffs hitting headlines again earlier this week, minutes released today from the Federal Reserve’s June meeting, renewing fears of tariff-borne inflation, could perhaps have come at a better time.
In the report, the Fed cited the potential for tariffs to disrupt supply chains and affect productivity. The Fed also questioned the consistency of recent export data, inferring that tariffs and their short-term effect on exports are muddying the waters that would otherwise allow the Federal Reserve a more straightforward path towards rate cuts.
Remaining staunch in their ‘wait-and-see’ policy for much of this year, while assuring that future decisions will be made on data alone, most will remain unsurprised that the Federal Reserve is erring on the side of caution.
When considering recent developments on US trade, extending tariff deadlines to August 1st, concerns made in FOMC minutes are now somewhat vindicated, and this offers the Fed further rationale to delay rate cuts, should they wish to.