Why the Fed’s Inflation Fight Could Be a Victim of Trump’s Tariffs and Tax Cuts

Trump is moving fast and breaking things — and creating more chaos than progress

by Peter Morici
Market Watch

President Trump is moving fast and breaking things — and is creating more chaos than progress in his wake. As a result, U.S. inflation and interest rates could become unmanageable, leaving the Federal Reserve unable to do its inflation-fighting job.

The Fed is holding the federal-funds rate steady while looking for signs that inflation is moving closer to 2%. The bond market, however, is betting that Trump’s policies will undercut central bank efforts.

Last fall, the Fed lowered the overnight borrowing rate 1 percentage point, but both the 2- and 10-year Treasury rates are higher. Those rates help determine interest for credit cards, auto loans and mortgages.

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