The US Federal Reserve on Wednesday announced another pause in rate cuts, and warned of higher risks to its inflation and unemployment goals in a likely reference to US President Donald Trump’s tariff rollout.
Policymakers voted unanimously to hold the US central bank’s key lending rate at between 4.25 percent and 4.50 percent, the Fed said in a statement.
Wall Street stocks closed higher following the Fed’s decision. Asian and European markets mostly rose yesterday ahead of weekend tariff talks between China and the US, with London boosted by reports that a “major trade deal” flagged by Trump was with the UK.
Photo: EPA-EFE
The “hard” economic data published in recent weeks points toward an economic slowdown, while the unemployment rate has hovered close to historic lows and inflation has trended toward the Fed’s 2 percent target.
However, the “softer” economic survey data have pointed to a sharp drop-off in consumer confidence and growing expectations of higher inflation over the longer term — in contrast to the market’s inflation expectations, which remain relatively well-anchored.
Speaking to reporters in Washington after the US central bank’s decision was published, US Federal Reserve Chair Jerome Powell said there was “a great deal of uncertainty” about where the Trump administration’s tariff policies would end up.
Trump’s moves have sent shivers through world markets, fueled fears of a global recession and speculation of a reordering of decades-old trading norms.
“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” Powell said.
“The effects on inflation could be short-lived, reflecting a one-time shift in the price level,” he said, adding that it was “possible that the inflationary effects could instead be more persistent.”
The Fed in its post-meeting statement said that “uncertainty about the economic outlook has increased further,” and that the chances of higher unemployment and inflation had also risen.
Powell was also asked about public criticism leveled at him and the Fed by senior government officials — including the US president, who has called for him to cut rates to boost economic growth.
An upbeat Powell said Trump’s criticism did not affect the Fed’s job of tackling inflation and unemployment “at all.”
“We are always going to consider only the economic data, the outlook, the balance of risks, and that’s it,” he said.
Analysts do not expect the Fed to move until July at the earliest.
“Recent job data, including last Friday’s non-farm payroll, indicate solid momentum, allowing the Fed to maintain its current stance,” JPMorgan Asset Management chief Asia market strategist Tai Hui (許長泰) said. “With only one more set of job data expected before the June 17-18 meetings, the likelihood of a rate cut in June is low. The Fed aims to assert its independence amidst pressure from President Trump to reduce rates, requiring significant deterioration in hard data to justify a cut.”
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS