Inflation puts US interest rate cuts on hold
On February 19, the data from the minutes of the Federal Reserve (Fed, central bank) meeting of last January were revealed. During the meeting, officials of the issuing body warned of the risks of an increase in inflation after a figure of 3% was recorded on an interannual level in the first month of the year.
According to the minutes of the Fed's meeting on January 28-29, officials indicated that Donald Trump's proposed tariffs, mass deportations and strong consumer spending are factors that could increase inflation this year.
"Overall, participants noted upside risks to the inflation outlook. In particular, they cited the potential impact of potential changes in trade and immigration policies, the possibility of geopolitical developments disrupting supply chains, or stronger-than-expected household spending," the minutes reveal.
The documents also reflect that during the meeting, the representatives of the issuing body cited a “high degree of uncertainty” surrounding the US economy, which is why a “careful approach” was adopted when considering any additional changes in its interest rate.
"All participants considered it appropriate to maintain the target range for interest rates between 4.25% and 4.5%," the document added.
Meanwhile, the Federal Reserve is waiting to see what impact the Trump administration's proposals and tariffs will have on the economy.
According to the AP news agency, which cites various analysts, tariffs will have a negative impact on inflation. Despite this, Fed officials such as Governor Christopher Waller maintain that a rate cut is possible for this year, although for the moment he supports the pause.
The European Union, a US partner with tense relations
Donald Trump's arrival at the White House has once again opened the wound of the trade deficit between the United States and the European Union. According to data from the statistical services of the bloc of 27, this is the largest bilateral trade and investment relationship and the most integrated economic relationship in the world. In 2023 it was around 1.5 trillion euros.
However, Donald Trump's tariff threat has put the continuity of the trade relationship in jeopardy. In response to the latest warning, the imposition of tariffs on European car imports, EU Trade Commissioner Maros Sefcovic travelled to the United States to meet with his American counterpart and, to the extent possible, with President Donald Trump.
"The EU is interested in concluding agreements that foster fairness, burden-sharing and mutual benefits. It is worth reiterating that the transatlantic link is the most natural one for us. I firmly believe that it makes sense for both the EU and the US to work together to strengthen this relationship and expand into new markets. So let us continue to make our trade and investment relationship unique, truly unique on the world stage," Sefcovic said during an event in Washington.
Since coming to power for his second term, Trump has made no secret of his desire to apply tariffs to achieve his goals. On February 18, he made it clear that he wants more investment from global companies in the United States, and he hopes to achieve this with incentives.
