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.
Photo: Reuters
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.
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
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
TARIFF CONCERNS: The chipmaker cited global uncertainty from US tariffs and a weakening economic outlook, but said its Singapore expansion remains on track Vanguard International Semiconductor Corp (世界先進), a foundry service provider specializing in producing power management and display driver chips, yesterday withdrew its full-year revenue projection of moderate growth for this year, as escalating US tariff tensions raised uncertainty and concern about a potential economic recession. The Hsinchu-based chipmaker in February said revenues this year would grow mildly from last year based on improving supply chain inventory levels and market demand. At the time, it also anticipated gradual quarter revenue growth. However, the US’ sweeping tariff policy has upended the industry’s supply chains and weakened economic prospects for the world economy, it said. “Now
RSS