According to ChainCatcher, citing the Financial Times, the head of Fidelity's $2.3 trillion fixed income business stated that as Trump's trade war disrupts economic prospects, the Federal Reserve's policy makers' goals of curbing inflation while maximizing employment are pulling them "in completely different directions".
Robin Foley said that the Federal Reserve's "efforts to fight 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 rate-cutting cycle starting in 2024, as Trump's tariffs could exacerbate inflation and impact the job market.
Foley noted that over the past year, market participants' expectations for interest rates have undergone "very unstable" changes. Futures market trading suggests that investors expect the Federal Reserve to resume rate cuts in September, which is much later than initial predictions at the beginning of the year.
