Opinion: The Fed Will Not Ride to Trump's Rescue in a Trade War

On April 10th, Roubini Advises Wall Street Against Placing Bets on the Fed to Significantly Cut Interest Rates Renowned economist Roubini, who is known as the "Doomsday Doctor" for accurately foreseeing the global financial crisis, has given a new warning to Wall Street: traders should reduce their wagers on the Federal Reserve intensifying interest rate cuts in order to alleviate the impact of President Trump's trade war. Roubini believes that the US will avoid a recession and expects the Fed to maintain interest rates unchanged for the rest of the year after a de-escalation in tariff-related policy disputes. He stated, "This is clearly a showdown between the Trump bottom and the Powell bottom." He added, "But what I'm suggesting is that Powell's exercise price will be lower than Trump's bottom, meaning Powell will wait for Trump to blink first." Fed Chairman Powell recently mentioned that the economic impact of new tariffs could be much greater than expected, and the central bank must ensure that this does not lead to a worsening inflation problem. Traders this week have been considering expectations of three to five Fed interest rate cuts of 25 basis points each. Some on Wall Street even speculate that the Fed may make an emergency rate cut before the next meeting. (IG)