Economists: Tariff uncertainty challenges the Fed's data-dependent policy stance

ChainCatcher news, according to the Financial Times, economists believe that the uncertainty surrounding Trump's tariffs complicates the efforts of the data-dependent Federal Reserve to provide clear information about the direction of the economy. As the Federal Reserve prepares to announce its latest interest rate decision on Wednesday, data released last week showed that inflation slowed more than expected in February, supporting the case for a return to rate cuts later this year amid signs of economic growth slowing.

However, policymakers are also weighing concerns that the promised trade tariffs could exacerbate inflation or trigger an economic slowdown—or both. Joe Brusuelas, chief economist at tax and consulting firm RSM US, stated, "The commitment to future tariffs essentially sets aside the Fed's data-dependent goal, meaning they will have to rely more on a predictive framework." While it is widely expected that the Federal Reserve will keep interest rates unchanged this week, investors will closely monitor the economic forecasts from Fed officials, as well as the post-meeting statement from Fed Chair Powell. These forecasts reflect their views on the level of interest rates in the coming years.