Fidelity Bond Manager: Tariffs put The Federal Reserve (FED) in a dilemma

[Fidelity Bond Chief: Tariffs Put The Federal Reserve in a Dilemma] The Financial Times reported that the head of Fidelity’s $2.3 trillion fixed income business stated that as Trump’s trade war disrupts the economic outlook, the Federal Reserve policymakers’ goals of curbing inflation while maximizing employment are “pulling them in completely opposite directions.” Robin Foley stated that the Federal Reserve’s efforts to combat inflation are good, but employment remains to be seen. She added that the central bank is in a “dilemma.” Foley made these remarks as the Federal Reserve paused its interest rate cut cycle that began in 2024 this year, as Trump’s tariffs could exacerbate inflation and impact the job market. Foley pointed out that over the past year, market participants have experienced “very unstable” changes in their expectations regarding interest rates. Futures market trading indicates that investors expect the Federal Reserve to resume interest rate cuts in September, which is much later than earlier predictions. (Jin Shi)