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Scott Bessent Accuses IMF and World Bank of ‘Mission Creep’

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Treasury Secretary Scott Bessent on Wednesday called for major overhauls to the missions of the International Monetary Fund and the World Bank but said the United States remained committed to maintaining its leadership role at the global economic institutions.The comments, at a speech on the sidelines of the spring meetings of the I.M.F. and the World Bank, come at a moment of concern among policymakers that the Trump administration could withdraw the United States entirely from the fund and the bank.The United States has upended the global trading system in recent months, and the views of the Trump administration on climate change, international development and economic equity are often at odds with those of the other nations that are shareholders in the global institutions.On Tuesday, the I.M.F. downgraded its outlook for growth globally and in the United States as a result of President Trump’s punishing tariffs. Trade tension between the United States and China, the world’s largest economies, threaten to weigh on output this year and next.In his remarks, Mr. Bessent defended the Trump administration’s trade actions and called for China to curb economic practices that he said were destabilizing international commerce. He noted that the United States was engaged in trade talks with dozens of countries and expressed optimism that these negotiations would help rebalance the world economy and make the global trading system more fair.It remains unclear when, or if, the United States and China will begin to engage in talks. Mr. Trump has said he expects to speak with Xi Jinping, China’s leader, but no formal conversations have been scheduled.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    IMF Expects Trump’s Tariffs Will Slow Global Economic Growth

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    President Trump’s trade war is expected to slow economic growth across the globe this year, in large part because his aggressive use of tariffs is likely to weigh heavily on the United States, the world’s largest economy.The economic projections were released on Tuesday by the International Monetary Fund, in the wake of Mr. Trump’s decision to raise tariffs to levels not seen since the Great Depression.The president has imposed a 10 percent tariff on nearly all imports, along with punishing levies of at least 145 percent on Chinese goods that come into the United States. Mr. Trump also imposed what he calls “reciprocal” tariffs on America’s largest trading partners, including the European Union, Japan, South Korea and Taiwan, although he has paused those until July as his administration works to secure bilateral trade deals.Mr. Trump’s approach has created paralyzing uncertainty for U.S. companies that export products abroad or rely on foreign inputs for their goods, dampening output just as economies around the world were stabilizing after years of crippling inflation. China and Canada have already retaliated against Mr. Trump’s tariffs with their own trade barriers, and the European Union has said it is prepared to increase levies if the United States goes ahead with its planned 20 percent tax.The World Economic Outlook report projects that global output will slow to 2.8 percent this year from 3.3 percent in 2024. In January, the fund forecast that growth would hold steady in 2025.The I.M.F. also expects output to be slower next year than it previously predicted.Much of the downgrade for this year can be attributed to the impact of the tariffs on the U.S. economy, which was already poised to lose momentum this year. The I.M.F. expects U.S. output to slow to 1.8 percent in 2025, down from 2.8 percent last year. That is nearly a full percentage point slower than the 2.7 percent growth that the I.M.F. forecast for the United States in January, when it was the strongest economy in the world.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Says Fed Chair Jerome Powell’s ‘Termination Cannot Come Fast Enough’

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    President Trump lashed out on Thursday at Jerome H. Powell, the chair of the Federal Reserve, saying, “Powell’s termination cannot come fast enough!”Mr. Trump’s ire followed remarks by Mr. Powell on Wednesday, when he warned in a speech that the president’s tariffs could create a “challenging scenario” for the central bank by putting its two main goals — stable inflation and a healthy labor market — in tension.Mr. Powell reiterated that the Fed could afford to be patient with its interest rate decisions until it had more clarity about Mr. Trump’s policies. The Fed chair’s emphasis on the need to ensure that a temporary rise in inflation from tariffs did not become a more persistent problem suggested that the bar for further rate cuts was high.The president has been pushing for Mr. Powell to cut rate since returning to the White House. On Thursday, he referred to expectations that the European Central Bank would lower borrowing costs, saying the Fed should do the same.“The ECB is expected to cut interest rates for the 7th time, and yet, ‘Too Late’ Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete ‘mess!’,” Mr. Trump wrote on his Truth Social platform. “Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!”The Fed seeks to operate independent of political influence, something that Mr. Powell on Wednesday said was a “matter of law.” He also said the Fed’s independence was “very widely understood and supported in Washington and in Congress where it really matters.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Bond Market is Upended by Trump’s Tariffs

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    The bedrock of the financial system trembled this week, with government bond yields rising sharply as the chaotic rollout of tariffs shook investors’ faith in the pivotal role played by the United States in the financial system.U.S. government bonds, known as Treasuries because they are issued by the U.S. Treasury, are backed by the full faith of the American government, and the market for Treasuries has long been deemed one of the safest and most stable in the world.But the Treasury market’s erratic behavior all week has raised fears that investors are turning against U.S. assets as President Trump’s trade war escalates.The yield on the 10-year Treasury, which underpins corporate and consumer borrowing and is arguably the most important interest rate in the world, rose roughly 0.1 percentage points on Friday. The rise added to sharp moves throughout the week that have taken the yield on the 10-year Treasury from less than 4 percent at the end of last week to around 4.5 percent.These increases may seem small, but they are large moves in the Treasury market, prompting investors to warn that Mr. Trump’s tariff policies are causing serious turmoil. It matters to consumers as well. If you have a mortgage or car loan, for example, then the interest rate you pay is related to the 10-year yield.Ten-year treasuries are also considered a safe haven for investors during time of volatility in the stock market, but this week’s sharp rise in yields have made this market unusually perilous.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Under Pressure as Inflation Expectations Surge

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    Federal Reserve officials have had one clear message since President Trump sharply escalated the global trade war this month. Keeping inflation expectations in check as price pressures rise is their No. 1 priority.On Friday, they faced a big setback.A new survey released by the University of Michigan found that as consumer sentiment took another nosedive because of fears associated with Mr. Trump’s tariffs, expectations about inflation — in the year ahead and over a longer time horizon — jumped sharply.Over the next 12 months, respondents now expect inflation to surge to 6.7 percent, the highest reading since 1981 and a significant increase from the March level of 5 percent. In five years’ time, they are bracing for inflation to stay stuck above 4 percent. The Fed’s goal is 2 percent inflation.There are reasons to take this data with a grain of salt. For one, the survey tends to reflect political biases. Since Mr. Trump returned to the White House, Democrats, once optimistic about the outlook, have turned much more downbeat, about not only inflation but also growth and the labor market. Republicans, meanwhile, have flipped from being far more pessimistic during Biden’s presidency to much more positive.On the margins, that political divide may be beginning to narrow, with the decline in sentiment in April “pervasive and unanimous across age, income, education, geographic region and political affiliation,” according to Joanne W. Hsu, director of the consumer surveys. Independents are also starting to change their opinions in a distinct way, accounting for a large part of the rise in longer-run inflation expectations.What has helped to somewhat alleviate concerns about the survey findings is the fact that market measures of longer-run inflation expectations, which are based on U.S. government bonds, have stayed far more stable. The divergence has been so stark as to prompt Jerome H. Powell, the Fed chair, to refer to the University of Michigan survey as an “outlier,” as recently as last month.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    JPMorgan Chase CEO Jamie Dimon Warns of Economic Pain From Trump’s Tariffs

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    President Trump’s wave of tariffs threatens to bring both short-term economic pain, including lower growth, and long-term damage to America’s standing and trade relationships around the world, the chief executive of Wall Street’s biggest bank warned on Monday.“The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession,” Jamie Dimon, JPMorgan Chase’s chief executive, wrote in his annual letter to shareholders.The warning by Mr. Dimon, one of Wall Street’s most influential leaders, echoes the growing anxiety among corporate chiefs about how the tariffs will play out. Even those who had initially professed support for Mr. Trump’s trade plans are becoming increasingly worried about the consequences.Even before Mr. Trump’s tariff announcement last week, the U.S. economy had been showing signs of strain after years of healthy performance, Mr. Dimon wrote. Inflation was already a worry, he said, pointing to a yawning fiscal deficit and the need for more infrastructure spending. And stock valuations remain well above historical averages, even after the recent market sell-off.The potential consequences of the trade fight could make things worse, the letter said. Those include other countries’ efforts to fight back — as China has done by imposing 34 percent counterlevies — and a possible erosion of confidence among consumers and investors. Mr. Dimon also warned about the weakening of the American dollar’s role as the global reserve currency.“If America, for whatever reason, becomes a less attractive investment destination, the U.S. dollar and the economy could suffer if foreigners sold their U.S. assets,” he wrote.JPMorgan’s own economists have increasingly been saying a recession is more likely this year, though Mr. Dimon did not personally take a position on those odds in his shareholder letter.While he asserted that JPMorgan itself was strong enough to withstand the shocks that the levies posed — its traders have profited from previous whipsaws in the markets — the global economy may not be so fortunate. “It is not particularly good for the capital markets,” Mr. Dimon wrote of the tariff-linked volatility.For now, Mr. Dimon wrote, he is hoping for a speedy resolution to the trade battles. “The quicker this issue is resolved, the better, because some of the negative effects increase cumulatively over time and would be hard to reverse,” he wrote.The longer-term worry, Mr. Dimon said, is that Mr. Trump’s fight could shred decades-old alliances that cemented the United States’ primacy in the global order. The JPMorgan chief wrote that he was worried that America’s trading partners might seek out deals with the likes of China, Iran or Russia in response to the tariffs.“America First is fine,” Mr. Dimon wrote, referring to Mr. Trump’s description of his policies, “as long as it doesn’t end up being America alone.” More

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    Powell Warns Trump’s Tariffs Risk Stoking Even Higher Inflation and Slower Growth

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    Jerome H. Powell, the chair of the Federal Reserve, warned that President Trump’s tariffs risk stoking even higher inflation and slower growth than initially expected, as he struck a more downbeat tone about the outlook, despite the economy so far remaining in a “good place.”“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” he said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”Mr. Powell characterized the risks of that outcome, which he warned could include higher unemployment, as “elevated.”“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” he said in a speech at a conference in Arlington, Va., on Friday.“Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices,” he said. Higher inflation stemming from tariffs could show up “in the coming quarters,” he said.Mr. Powell added that the Fed’s “obligation” was to ensure that a “one-time increase in the price level does not become an ongoing inflation problem.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    As Trump Stokes Uncertainty, the Fed Asks Businesses Where It Hurts

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    The central bank’s outreach to companies has taken on new significance as the outlook for growth and inflation gets cloudier.Chris Bergen, who runs a commercial greenhouse business in northern Minnesota, finds himself “walking a tightrope” roughly two months into President Trump’s second term. Acute uncertainty about how the administration’s trade and immigration policies will unfold and affect the economy has made him much more cautious about any expansion plans.As one of the country’s biggest producers of bedding plants, perennials and other flowers, Bergen’s Greenhouses is exposed on many fronts.Every June, it trucks in more than six million pounds of peat moss from Manitoba. Suppliers have stopped quoting prices until they have more clarity on tariffs. The plastic flower pots that Mr. Bergen imports from China could also wind up costing more if tariffs remain in place, squeezing already “razor-thin margins,” he said. He is also worried about needing to find workers if Mr. Trump, as part of an immigration crackdown, ends a program that provides temporary visas to many of the company’s agricultural workers.“We’re not putting our foot on the brake, but we are taking our foot off the gas,” said Mr. Bergen, whose family has run the business for over a century.That caution is one of the biggest concerns for the Federal Reserve, which is facing an increasingly challenging economic moment with little precedent. The central bank is trying to get a better read on the economy as it debates when — or if — it can again lower interest rates with inflation still too high for its liking. Businesses are warning of both higher prices and slower growth, effects that have yet to show up entirely in the economic data. The 12 regional presidents at the central bank have always kept close tabs on businesses in their districts in order to understand how economic conditions are evolving. That local outreach has taken on new significance as the range of possible outcomes has widened drastically.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Inflation Remained Sticky Ahead of Trump’s Escalating Trade War

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    The Federal Reserve’s preferred inflation measure showed underlying price pressures persisting in February.Americans hoping for some relief on inflation suffered a setback in February, as new data showed underlying price pressures intensifying even before the latest escalation in President Trump’s trade war.The Personal Consumption Expenditures price index, after stripping out volatile food and energy items, climbed 2.8 percent in February from a year earlier, outpacing January’s annual pace. On a monthly basis, these prices ticked up another 0.4 percent, higher than the monthly increase in January.Overall inflation came in at 2.5 percent, a level that sits well above the Federal Reserve’s 2 percent target and has been more or less in place since November.The latest data from the Commerce Department highlights the extent of the challenge the central bank is confronting. Its debate over what to do about interest rates has been complicated by a rapidly escalating trade war, one that has bred extreme uncertainty about the economic outlook.On Wednesday, Mr. Trump announced 25 percent tariffs on cars and car parts imported into the United States and has vowed to unveil another set of tariffs next week.With the scope and scale of the tariffs not yet clear, and a host of other policies pertaining to immigration, taxes and deregulation still being worked out, the Fed has opted to stand pat until it gets more clarity about what exactly Mr. Trump will enforce and how consumers and businesses will respond.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More