- Janet YellenFormer chairman of the federal reserve system and the secretary of the US Treasury, called President Donald Trump tariffs “wrong” and “incomprehensible”. She has outlined the problems they create for the federal reserve: tariffs can nourish inflation and slow down.
Janet Yellen does not stand for the president’s tariffs. The former federal chairman and Minister of Finance called the tariffs “wrong” and “goals incomprehensible”.
“We are in the world of enormous uncertainty,” – she – Note upon Bloomberg television Monday.
In early April, President Donald Trump announced a wide mutual tariff regime that directed the stock market and led to chaos on the bond market. He later Press Pause make deals, and the stock market bounced. He may have got into his bottom, but there is no way to say for sure. After all, if -no 90-day graceful period ended: “We could go back to the same place in early July,” LPL’s financial strategists wrote A note of research released on Monday.
However, Trump has placed a 10% blanket tariff in other countries and more tax in China. Since then, China has avenged. Trade was hardly stopped between the two countries until the administration announced exemption About things such as smartphones, computers and semiconductors. It is unclear how long it will last; The president said that after no one left the tariff hook, and his secretary of trade, Howard Lutnit, warned duties coming on technology.
However, everything calmed down. Some recession calls were haulBut not all. “We would need a decline,” Yellen said. Others, such as Bridgewater Associates founder Ray Dalio and Chief Economist Moody Mark Zandi, warned that there may be a recession feasibletoo.
Inflation expectations increase and consumers’ moods are downfall. This can lead to a reduction in consumer spending and investment in business slowing. The Central Bank is in standby. This monitors that it may be tariff inflation and not continue to reduce interest rates. But inflation is just one part of its double mandate, consisting of stable prices and maximum employment. Business costs usually go hand in hand with unemployment growth. Thus, it can push the Central Bank to step and reduce interest rates.
“When the Fed sees a weakening in the economy, unemployment is growing, we have fallen into recession, it will create a good reason to reduce the speed,” Yellen explained. “But whether they will feel comfortable depends on what is happening from the inflation.”
Yellen, like her successor Fed Jerom Powell, suggests that tariffs can be A one -time shock to prices. This, however, does not take into account things such as workers who negotiate the increase in wages to later offset more expensive prices and more tariffs, she said. A tariffs Only in China can create a significant burden for households and businesses, Yellen believes, calling an escalation trade war “legitimate damage to the US economy”. Both examples can lead to constant inflation, which is a problem for the Fed that would not allow it to shorten the speed.
Mohammed El Eriyan, President of the College Quins at the University of Cambridge, Recently wrote This Powell Fed can be “one of the most undertaken”.
Originally this story was presented on Fortune.com
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2025-04-15 16:23:00
Alena Botros
