Expect significant new tariffs on Chinese imports and moderate levies on goods from other nations , as President-elect Donald Trump rolls out his protectionist agenda. However, with his preference for chaotic policymaking and sudden shifts , there’s uncertainty on how soon these import taxes will actually hit. Dubbed “ Tariff Man ,” Trump aims to use tariffs both strategically and tactically . He’s mentioned taxing all Chinese goods up to 60% and potentially setting 10%-20% tariffs on imports globally , but details on these plans remain vague . Key players within Trump’s team are divided: Robert Lighthizer , a staunch tariff advocate, sees permanent duties as crucial to balance US trade , while others, like billionaires John Paulson and Scott Bessent , view tariffs as temporary leverage. Trump’s previous administration had mixed feelings, especially on national security-related trade limits , which he sometimes dismissed, favoring an “open for business” approach. High-profile busin
Fed Rate Cuts on the Horizon: James Bullard Predicts Possible September Reduction After Latest Inflation Report
James Bullard, former CEO and president of the Federal Reserve Bank of St. Louis, hinted at possible rate cuts in September following the latest US inflation report. Speaking with Tan Min Lan, head of UBS’s chief investment office in Asia Pacific (APAC), Bullard expressed optimism about the market's estimate of one or two rate cuts this year.
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“This latest inflation report brought September back into play,” Bullard said, suggesting that the favorable inflation numbers could prompt an earlier move by the US Federal Reserve. Bullard, who now teaches at Purdue University, noted that the Fed might still wait for additional inflation reports over the summer before making a decision.
UBS’s chief investment office forecasts two rate cuts in 2024, one in September and another in December, followed by one cut per quarter in 2025. Bullard believes this path is possible, though he acknowledged that the future remains uncertain.
In an April interview with Bloomberg TV, Bullard predicted three interest rate cuts in 2024 as inflation moves closer to the Fed’s 2% target.
No More Rate Hikes Expected
Bullard also shared his thoughts on the likelihood of the Fed raising rates again. “I don’t think that’s likely,” he said, explaining that keeping the current policy rate might be enough to maintain downward pressure on inflation.
US Economy Remains Strong
Despite concerns about a potential recession, Bullard expects the US economy to stay robust. He pointed out that in the second half of 2023, the US economy grew at an impressive 4% annual rate, defying market expectations of a downturn. While the economy slowed slightly in the first half of 2024, it still saw solid growth, with a 1.3% increase in real GDP in the first quarter.
Bullard anticipates the US economy will slow down to a trend growth rate of around 2%, rather than entering a recession. He is confident in a "soft landing," where the economy stabilizes without severe downturns.
Fed's Aggressive Moves Paying Off
Reflecting on the Fed's aggressive approach to tackling inflation in 2022, Bullard highlighted the success of significant rate hikes and focused efforts to bring inflation down. By the end of 2023, inflation had dropped to 3.9%, down from 5.7% in 2022.
In May, the US reported a 0.3% month-over-month increase in its April core consumer price index (CPI), with a 3.6% year-over-year rise. Despite some lingering inflation, Bullard expects disinflation to resume, allowing the Fed to proceed with its rate cut plans.
Stock Market Resilience
Bullard also commented on the US stock market's resilience amid high inflation. He praised the swift actions of the Fed for moderating inflation expectations without triggering a recession. By acting decisively, the Fed helped prevent random price increases and maintained economic stability.
As the US economy continues to navigate these challenges, Bullard remains optimistic about the future, seeing significant progress in the fight against inflation. The possibility of rate cuts in September offers hope for easing financial pressures and sustaining economic growth.
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