On May 10th, the Federal Reserve’s MUSALEM stated that if the rise in inflation proves to be short-lived, expectations remain stable, and the economy clearly weakens, then interest rate cuts are still possible. The impact of tariffs on inflation may be short-lived, but it can also be more lasting. Interest rate cuts should not be promised until the impact of tariffs on inflation becomes apparent. Economic activity in the United States has slowed down and sentiment has declined.
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