Finance

During a keynote address at the National Association for Business Economics conference, Musalem noted that his baseline case is for inflation to gradually move toward the central bank’s 2% target. 
However, “near-term inflation expectations have risen substantially over the last few weeks, and that’s something I’m watching closely,” Musalem added.

Alberto Musalem, President and CEO of the Federal Reserve Bank of St. Louis, speaks to the Economic Club of New York, in New York City, U.S., Feb. 20, 2025.
Brendan McDermid | Reuters

WASHINGTON — The risks for higher inflation are on the rise, St. Louis Federal Reserve President Alberto Musalem said Monday.
During a keynote address at the National Association for Business Economics conference, Musalem noted that his baseline case is for inflation to gradually move toward the central bank’s 2% target. This scenario requires inflation expectations to remain anchored and stable, he noted.

However, “near-term inflation expectations have risen substantially over the last few weeks, and that’s something I’m watching closely,” Musalem added.
Indeed, the February reading on The Conference Board’s consumer confidence index reflected the largest one-month drop since August 2021, as inflation expectations rise. The Institute for Supply Management’s manufacturing PMI also showed a sharp increase in prices within the sector for the month.
“Businesses and households are clearly more sensitive to expectations of higher inflation,” Musalem said. “That’s why the risks seem more skewed to the upside, but the baseline is for continued disinflation.”
Investors came into 2025 expecting the Fed to lower rates this year. However, the central bank kept rates at their current 4.25%-4.5% range after its January meeting, where it noted that inflation remained “somewhat elevated.”
The CME Group’s FedWatch tool also shows that traders are pricing in a 93% likelihood that the Fed will keep rates at their current levels at the central bank’s March meeting.
Musalem’s remarks come as investors brace for U.S. tariffs on imports from China, Mexico and Canada — with many worried the levies will drive prices higher, thus making it harder for the Fed to ease rates going forward.

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Republicans and Democrats are making competing claims about the impact of extending provisions in the Tax Cuts and Jobs Act.
The GOP sees it as a windfall for low- and middle-income households. Democrats view it as a handout for the wealthiest Americans.
Both sides can be correct depending on the frame of reference, tax experts said.

Speaker of the House Mike Johnson (R-LA) leaves after the House passed Republicans’ budget resolution on the spending bill on Feb. 25, 2025 in Washington.
Kayla Bartkowski | Getty Images News | Getty Images

As Congress debates how to handle trillions of dollars in expiring tax breaks, lawmakers on both sides have been lobbing claims about which consumers will see the biggest benefits from extending them. Economists and tax experts say the answer isn’t so straightforward.
In short: Who benefits depends on your frame of reference.

House Republicans passed a budget plan Tuesday that lays the groundwork to extend the Tax Cuts and Jobs Act, a package of tax cuts enacted in 2017 during President Trump’s first term.
Many of the cuts for individual taxpayers will expire after 2025 unless Congress acts — and the GOP can do this with a simple majority vote in Congress by using a special legislative maneuver called budget reconciliation.
Rep. Richard Neal, D-Mass., ranking member of the House Ways and Means tax committee, said Wednesday that Republicans’ policy plan — central to which is an extension of the Trump tax cuts, estimated to cost more than $4 trillion — amounts to a “reverse Robin Hood scam” that gives to the rich and takes from the poor.

Meanwhile, Republicans say low- and middle-income households stand to win under the plan.
“Extending the Trump tax cuts delivers the biggest relief to working-class Americans and small businesses in a generation,” Rep. Jason Smith, R-Missouri, chairman of the Ways and Means Committee, said Tuesday.

Experts say both sides’ arguments have merit.
“The interesting thing is both can be true, depending on how you interpret what they’re saying,” said James Hines, a law and economics professor at the University of Michigan and research director in its Office of Tax Policy Research.

The Trump law cut taxes for most people

President Trump speaks about the passage of tax reform legislation on the South Lawn of the White House on Dec. 20, 2017.
Saul Loeb | Afp | Getty Images

The Tax Cuts and Jobs Act lowered taxes for most U.S. households, experts said.
The legislation was broad, benefiting Americans across the income spectrum — which is broadly consistent with Republicans’ claims, they said.
Changes like a larger child tax credit and an expanded standard deduction cut income taxes for many low and middle earners, while lower marginal tax rates and tax deductions for business owners largely helped the wealthy, experts said.
If TCJA provisions are extended, 62% of tax filers would see lower tax bills in 2026, compared to if the measures expire, according to the Tax Foundation. (Put another way, many people’s tax bills would increase next year without an extension.)
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With those provisions in place, Americans would get a 2.9% boost in income after taxes in 2026, on average, according to the Tax Foundation. Income would rise by 3.4% if factoring in broader impacts of the tax cut on the U.S. economy, it said.
A U.S. Treasury Department report issued in the waning days of the Biden administration had a similar finding: The average person would get a 2.2% tax cut by extending the Trump law. (Its estimate is for the 2025 budget year.)
All income groups would get a boost in after-tax income, Treasury said.

The rich are the ‘biggest winners’

U.S. House Minority Leader Hakeem Jeffries (D-NY), joined by Rep. Pete Aguilar (D-CA) and Rep. Katherine Clark (D-MA), delivers remarks after the House passed Republicans’ budget resolution on the spending bill on Feb. 25, 2025.
Kayla Bartkowski | Getty Images News | Getty Images

However, with an extension, the largest tax cuts would accrue to the highest-income families, Treasury said.
Household in the top 5% — who earn over $450,000 a year, roughly — are the “biggest winners,” according to a July 2024 analysis by the Urban-Brookings Tax Policy Center. They’d get over 45% of the benefits of extending the Tax Cuts and Jobs Act, it said.
A Penn Wharton Budget Model analysis on the impacts of the broad Republican tax plan had a similar finding.
The bottom 80% of income earners would get 29% of the total value of proposed tax cuts in 2026, according to the Wharton analysis, issued Thursday. The top 10% would get 56% of the value, it said.

This dynamic speaks to Democrats’ arguments, especially when coupled with possible spending cuts for programs like Medicaid and food stamps. Such programs largely benefit lower earners.
Wharton estimates that the combination of tax cuts and spending reductions for programs like Medicaid and food stamps would leave “low-income households worse off,” even after accounting for economic growth.
Some tax analysts view after-tax income as among the best frames of reference to assess policy impact, because it estimates how much a household’s buying power improves. Others disagree, however, saying it’s hard to control for other economic variables that might alter income.

The top 1% of households (who make about $1 million or more a year) would get a 3.2% boost in after-tax income in 2027 via an extension of the Trump law, the Tax Policy Center said. In dollar terms, their tax savings would be about $70,000, on average.
By comparison, middle-income households, would get a 1.3% income boost, or a $1,000 tax cut, according to the Tax Policy Center.

The rich ‘pay most of the taxes’

In a sense, this dynamic is to be expected because the U.S. income-tax system is progressive, experts said. That means high earners generally shoulder more of the overall tax burden than low earners.
“If you ask, ‘Who gets the dollars,’ it’s mostly rich taxpayers,” said Hines of the University of Michigan. “But that’s because it’s a tax cut and they pay most of the taxes.”
The top 1% paid 40% of all U.S. income taxes collected in 2022, according to a recent Tax Foundation analysis. The bottom 90% paid about a quarter — 28% — of total income tax.
“Democrats say most of the tax dollars went to the rich: They’re absolutely correct,” Hines said.
However, the TCJA cut taxes more for working families than rich families on a proportional basis, a White House spokesperson said.
Experts agreed with that assessment.
“Republicans say, ‘But the cuts were not slanted to the rich compared to how much people were paying originally,” which is also generally correct, Hines said.

President Donald Trump holds up a copy of legislation he signed before before signing the tax reform bill into law in the Oval Office Dec. 22, 2017.
Chip Somodevilla | Getty Images News | Getty Images

For example, the bottom 50% of Americans saw their average federal tax rate fall by 15% from 2017 to 2018, after the Trump tax cut took effect, according to the Tax Foundation. (Their rate fell to 3.4% from 4%.)
By contrast, the top 1% saw their average rate decline by a lesser percentage (about 5%) during that period, to 25.4% from 26.8%.
“The reason why the debate is so fractured is there are elements of truth to both sides,” said Garrett Watson, director of policy analysis at the Tax Foundation. “It’s a battle of metrics, and what weight to place on each of them.” More

Warren Buffett at a press conference during the Berkshire Hathaway Shareholders Meeting on April 30, 2022.

Legendary investor Warren Buffett made a rare comment on President Donald Trump’s tariffs, saying punitive duties could trigger inflation and hurt consumers.
“Tariffs are actually, we’ve had a lot of experience with them. They’re an act of war, to some degree,” said Buffett, whose conglomerate Berkshire Hathaway has large businesses in insurance, railroad, manufacturing, energy and retail. He made the remarks in an interview with CBS News’ Norah O’Donnell for a new documentary on the late publisher of the Washington Post, Katharine Graham. 

“Over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay ’em!” Buffett said with a laughter. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'”
This marks the first public remark from the 94-year-old “Oracle of Omaha” on Trump’s trade policies. Last week, Trump announced that the sweeping 25% tariffs on imports from Mexico and Canada will go into effect March 4 and that China will be charged an additional 10% tariff on the same date. China has vowed to retaliate.
During Trump’s first term, the Berkshire chair and CEO opined at length in 2018 and 2019 about the trade conflicts that erupted, warning that the Republican’s aggressive moves could cause negative consequences globally.
When asked about the current state of the economy by CBS, Buffett refrained from commenting on it directly.
“Well, I think that’s the most interesting subject in the world, but I won’t talk, I can’t talk about it, though. I really can’t,” Buffett said.

Buffett has been in a defensive mode over the past year as he rapidly dumped stocks and raised a record amount of cash. Some read Buffett’s conservative moves as a bearish call on the market and the economy, while others believe he’s preparing the conglomerate for his successor by paring outsized positions and building up cash.
Market volatility has ramped up as of late as concerns grew about a slowing economy, unpredictable policy changes from Trump as well as overall stock valuations. The S&P 500 is up just about 1% this year. More

For much of the time since Nayib Bukele became president in 2019, El Salvador has teetered on the brink of default. The warning signs were familiar: high debt and interest payments, exacerbated by a wide fiscal deficit; low dollar reserves; anaemic investment and GDP growth. Negotiations with the IMF over a bail-out were deadlocked. Mr Bukele’s relentless attacks on the judiciary, his opponents and the media did not inspire confidence. More

“The golden age of America begins right now.” So declared Donald Trump on January 20th in his inaugural address. In the six weeks since that chilly day, investors and economists have started to grapple with a less upbeat possibility: that his arrival in the White House is both causing and coinciding with a period of weakness for America’s economy. More

“The golden age of America begins right now.” So declared Donald Trump on January 20th in his inaugural address. In the six weeks since that chilly day, investors and economists have started to grapple with a less upbeat possibility: that his arrival in the White House is both causing and coinciding with a period of weakness for America’s economy. More

Citigroup mistakenly credited a customer’s account with $81 trillion last year when it meant to send just $280.
The payment, which took place last April, was missed by two employees but caught 90 minutes after it was posted, the Financial Times reported Friday.
The mistaken payment was reversed several hours later and reported to the Federal Reserve and Office of the Comptroller of the Currency as a “near miss.”

Jim Dyson | Getty Images News | Getty Images

Citigroup mistakenly credited a customer’s account with $81 trillion last year when it meant to send just $280.
The payment, which took place last April, was missed by two employees but caught 90 minutes after it was posted, the Financial Times first reported Friday. It was reversed several hours later and reported to the Federal Reserve and Office of the Comptroller of the Currency as a “near miss.”

The event is the latest mistake disclosed by the Wall Street bank, which is struggling to overcome a series of operational errors in recent years.
“Despite the fact that a payment of this size could not actually have been executed, our detective controls promptly identified the inputting error between two Citi ledger accounts, and we reversed the entry,” Citi said in a statement to NBC News. “Our preventative controls would have also stopped any funds leaving the bank. While there was no impact to the bank or our client, the episode underscores our continued efforts to continue eliminating manual processes and automating controls through our Transformation.”
Citi neither confirmed nor provided comment on the number of near misses it has experienced.
Near misses occur when a bank processes the wrong amount but is able to recover the funds. The bank suffered 10 near misses of $1 billion or more last year and 13 in the year prior, the according to the report.
The bank has been working to repair its reputation since it sent $900 million in error to creditors engaged in a contentious battle over the debt of cosmetics group Revlon five years ago — which led to the ousting of former CEO Michael Corbat, as well as big fines and regulatory consent orders requiring Citi to fix the issues.
Corbat’s successor, Jane Fraser, has said improving risk and controls is a top priority. The bank was still fined $136 million by regulators last year for not making enough progress on the improvements. More

The Consumer Financial Protection Bureau’s Trump-appointed leadership plans to fire nearly all its 1,700 employees while “winding down” the agency, according to testimony from employees.
In a trove of statements released late Thursday, federal employees said that the mass layoff was discussed in meetings they attended this month with senior CFPB leaders and members of Elon Musk’s so-called Department of Government Efficiency.
The filings were made in the case started by CFPB’s union that suspended acting CFPB Director Russell Vought’s moves to shutter the bureau.

Elon Musk holds up a chainsaw onstage during the Conservative Political Action Conference (CPAC) in National Harbor, Maryland, U.S., February 20, 2025. 
Nathan Howard | Reuters

The Consumer Financial Protection Bureau’s Trump-appointed leadership plans to fire nearly all its 1,700 employees while “winding down” the agency, according to testimony from employees.
In a trove of statements released late Thursday, federal employees said that the mass layoff was discussed in meetings they attended this month with senior CFPB leaders and members of Elon Musk’s so-called Department of Government Efficiency.

“My team was directed to assist with terminating the vast majority of CFPB employees as quickly as possible,” said an employee identified as Alex Doe, a pseudonym used out of fear of retaliation.
Doe said the plan from CFPB leaders and DOGE was to cut the bureau’s workforce in three phases. It would first eliminate probationary and term employees, then carry out a wave of about 1,200 layoffs, leaving a skeleton crew of a few hundred workers.
“Finally, the Bureau would ‘reduce altogether’ within 60-90 days by terminating most of its remaining staff,” Doe said.
The workers’ testimony comes at a crucial time for the CFPB, the agency created to protect consumers after the 2008 financial crisis caused by irresponsible lending. Since DOGE operatives first arrived at the CFPB this month, the bureau has shuttered its Washington headquarters, initiated the first round of layoffs and told those who remain to stop nearly all work.
The department has also reversed course on several cases where it accused financial firms including Capital One of ripping off customers, dismissing at least four cases Thursday involving billions of dollars in alleged consumer harm.

The filings containing the employee statements were made in the case started by a CFPB union, which led to a judge suspending acting Director Russell Vought’s moves to shutter the bureau. After the CFPB fired about 200 probationary and term employees, the agency’s actions were put on hold until a March 3 hearing.

‘Five men and a phone’

The documents show an apparent disconnect between some of the external messaging from Vought and the behind-the-scenes activity at the bureau.
In a motion filed Monday in the case, Vought pushed back against the idea that he planned to eliminate the CFPB.
“The predicate to running a ‘more streamlined and efficient bureau’ is that there will continue to be a CFPB,” he wrote.
But the Trump administration’s plan was to take the CFPB down to the barest minimum staffing required under law: Just five CFPB employees would remain, either in a stand-alone office or folded into another regulatory body, the workers testified.
In meetings between Feb. 18 and Feb. 25, “staff were told by Senior Executives that the CFPB would be eliminated except for the five statutorily mandated positions,” said another current CFPB employee, this one identified as Drew Doe.
“One Senior Executive said that CFPB will become a ‘room at Treasury, White House, or Federal Reserve with five men and a phone in it,'” Doe said.
Another CFPB employee said that he or she attended a Feb. 13 meeting in which the bureau’s chief operating officer, Adam Martinez, stated that the agency was in “wind-down mode.”
The CFPB employees said that, if directed to by the court, they would provide their names and titles under seal.

DOGE role

The bureau has long been a target of Republicans and financial institutions, who have called it a rogue agency that exceeded its legal authority in punishing companies. More recently, Musk has taken up the cause; he posted on his X platform, “RIP CFPB,” earlier this month just as his DOGE operatives began their work.
In several instances in the testimony, senior CFPB staff appeared to defer to DOGE employees for critical matters.
For instance, DOGE worker Jordan Wick “specifically stated” that Musk’s ad hoc group wanted a massive round of layoffs by Feb. 14.
“The Bureau intended to comply and fire the vast majority of remaining employees on February 14th,” Alex Doe said. “The only reason it did not do so is because of this Court’s order.”
In other instances, DOGE workers asked CFPB staff about how deeply they could cut operations while adhering to statutory requirements in areas like consumer response, per testimony from CFPB worker Matthew Pfaff.
Despite gaining full access to CFPB systems and data on Feb. 7, the DOGE employees haven’t yet completed the cybersecurity and privacy training required by the agency, the employees testified.

Legal requirements

While Musk and Vought have openly advocated for the termination of the CFPB, only Congress can truly shutter the agency, which was created after lawmakers passed the 2010 Dodd-Frank Act.
Vought’s moves appear to allow him to claim the CFPB still exists, while sidelining its role by drastically curtailing its ability to supervise companies and respond to complaints.
CFPB employees question whether a handful of employees could credibly fulfill the dozens of statutory requirements of the agency, which include responding to millions of consumer complaints filed via web and phone lines, as well as maintaining advocacy offices for military veterans and senior citizens.
On Thursday, Jonathan McKernan, President Donald Trump’s pick to take over at the CFPB for Vought, told lawmakers including Sen. Elizabeth Warren, the Massachusetts Democrat credited with spurring the agency’s creation, that he would “fully and faithfully” enforce laws related to the CFPB’s mission.
McKernan added that if confirmed by the Senate, he would “rightsize” the CFPB, as well as “refocus it” and “make it accountable.”
Noting that Vought, who is also head of the Office of Management and Budget, has canceled the lease on the agency’s headquarters, Sen. Jack Reed, D.-R.I., told McKernan that he was in a “very difficult position.”
“You do not appear to have much presidential support or OMB support, and I have this sinking feeling that you’re departing Liverpool on the Titanic,” Reed said. “Good luck.”

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