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    The Fed’s Projections: How to Read Them Like a Pro

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    Federal Reserve officials are scheduled to release their first set of economic projections this year, alongside their interest rate decision, on Wednesday. Those forecasts will offer a fresh glimpse of the trajectory for monetary policy at a highly uncertain moment for the central bank.Policymakers paused interest rate cuts in January after reducing borrowing costs by a percentage point in the latter half of last year. They are expected to again stand pat on Wednesday as they await greater clarity on how far President Trump will push his global trade war and to what extent he will follow through on other central aspects of his agenda, including slashing government spending and deporting migrants.The big question now is when — and to some extent whether — the Fed will be able to restart cuts this year.When the Fed last released quarterly economic projections in December, officials penciled in two rate cuts that would reduce borrowing costs by half a percentage point in 2025. But economists now expect Mr. Trump’s policies to lead to more intense price pressures and slower growth, a tough dynamic for the central bank and one that could prompt policymakers to scale back how many cuts they project going forward.Here’s what could change and how to interpret those updates.The dot plot, decodedWhen the central bank releases its Summary of Economic Projections each quarter, Fed watchers focus on one part in particular: the dot plot.The dot plot will show Fed policymakers’ estimates for interest rates through 2027 and over the longer run. The forecasts are represented by dots arranged along a vertical scale — one dot for each of the central bank’s 19 officials.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 Primed to Clash With Fed After Key Rate Decision

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    President Trump has never been shy about criticizing the Federal Reserve, frequently seeking to pressure the nation’s central bank into reducing interest rates more swiftly.“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!!,” Mr. Trump posted on Truth Social last month, adding: “Lets Rock and Roll, America!!!”But the Fed is expected to see things differently on Wednesday — choosing to hold rates steady in the face of rising prices and slowing growth — in a move that seems destined to stoke Mr. Trump’s anger.At the heart of the tension are Mr. Trump’s tariffs, which he has promised to apply more expansively beginning April 2. The White House contends its protectionist policies can rejuvenate American manufacturing and reduce the country’s reliance on imports, but economists believe that Mr. Trump risks touching off a protracted global trade war that will badly harm the U.S. economy.The latest dour projection arrived Tuesday, when Fitch Ratings cut its U.S. growth forecast for this year to 1.7 percent from 2.1 percent. It explicitly pointed to Mr. Trump’s tariffs — and the “huge uncertainty” around them — as two of the drivers behind a potential economic slowdown and short-term rise in prices.The uncertainty is likely to freeze any rate cutting at the Fed, perhaps straining an already tortured relationship between Mr. Trump and Jerome H. Powell, the man he handpicked to serve as chair of the central bank in 2017.In his first term, the president described Mr. Powell as the “enemy,” and blasted his colleagues as “boneheads,” in a bid to browbeat the Fed into slashing interest rates. Mr. Trump at one point even considered firing Mr. Powell, raising fears that the White House might try to undermine the Fed’s political independence.Soon after returning to the White House, the president revived his attacks: He said, again, that he would “demand that interest rates drop immediately,” and one of his leading advisers — the tech billionaire Elon Musk — signaled support for an audit of the central bank. When the Fed chose to hold rates steady at its last meeting, Mr. Trump charged anew that Mr. Powell and the Fed had “failed to stop the problem they created with inflation.”“If the Fed had spent less time on DEI, gender ideology, ‘green’ energy, and fake climate change, Inflation would never have been a problem,” Mr. Trump wrote in a post on Truth Social. More

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    Trump Says a Recession Would Be Worth It, but Economists Are Skeptical

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    President Trump and his advisers say his policies may cause short-term pain but will produce big gains over time. Many economists are skeptical of those arguments.Presidents usually do all they can to avoid recessions, so much so that they avoid even saying the word.But President Trump and his advisers in recent weeks have offered a very different message. Yes, a recession is possible, they have said. Maybe one wouldn’t even be that bad.Howard Lutnick, the commerce secretary, has said Mr. Trump’s policies are “worth it” even if they cause a recession. Scott Bessent, the Treasury secretary, has said the economy may need a “detox period” after becoming dependent on government spending. And Mr. Trump has said there will be a “period of transition” as his policies take effect.Such comments may partly reflect an effort to align political statements with economic reality. Mr. Trump promised to end inflation “starting on Day 1” and declared, in his inaugural address, that “the golden age of America begins right now.”Instead, inflation has remained stubborn, and while Mr. Trump has been in office less than two months, economists warn that his tariffs are likely to make it worse. Measures of consumer and business confidence have plummeted and stock prices have tumbled, attributable in large part to Mr. Trump’s policies and the uncertainty they have caused.“It’s the kind of language that you use when your policy isn’t going great and you can see that it’s actively harming people,” said Sean Vanatta, a financial historian at the University of Glasgow in Scotland.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 Expands Trade Threats in Global Game of Chicken

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    Trade wars with allies could spiral as the president tries to get trading partners to back down from retaliation with new threats of his own.For the second time this week, President Trump has threatened to disrupt trade with a close ally for retaliating in a trade war that he started — a tactic that could lead to compromise, or to economic spats that spiral further out of control.On Thursday morning, Mr. Trump tried to cow the European Union into submission, threatening in a social media post to put a 200 percent tariff on European wine and Champagne unless the bloc dropped a 50 percent tariff on U.S. whiskey. The European Union had imposed that tariff in response to levies that Mr. Trump put on global steel and aluminum on Wednesday.Mr. Trump deployed a similar tactic against Canada on Tuesday, threatening to double 25 percent tariffs on Canadian steel and aluminum to try to get Ontario to lift a surcharge on electricity sold to the United States. The province had imposed the charge after Mr. Trump put other tariffs on Canada this month.After Ontario suspended its surcharge, Mr. Trump walked back his threats.Over the last several weeks, Mr. Trump has presided over a confusing and potentially economically devastating back and forth of tariffs and tariff threats, playing a global game of chicken as he tries to get some of the United States’ closest allies and trading partners to back down.Mr. Trump has wielded the tariff threats without regard for their economic consequences and, increasingly, seemingly without regard for the impact on stock markets. The S&P 500 slumped again on Thursday after Mr. Trump threatened Europe and reiterated at the White House that he would impose big tariffs.When asked whether he might relent on Canada, which sent a delegation to the United States on Thursday to try to calm trade tensions, Mr. Trump said: “I’m not going to bend at all.”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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    U.S. Inflation Eased More Than Expected in February

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    Inflation eased more than expected in February, a welcome sign for the Federal Reserve as it grapples with the prospect of higher prices and slower growth as a result of President Trump’s trade war.The Consumer Price Index was up 2.8 percent from a year earlier, after rising another 0.2 percent on a monthly basis. That was a step down from January’s surprisingly large 0.5 percent increase and came in below economists’ expectations.The “core” measure of inflation, which strips out volatile food and fuel prices to give a better sense of the underlying trend, also ticked lower. The index rose 0.2 percent from the previous month, or 3.1 percent from a year earlier. Both percentages were below January’s increases.The data from the Bureau of Labor Statistics underscored the bumpy nature of the Fed’s progress toward its 2 percent goal. Prices for consumer staples, such as eggs and other grocery items, are rising steeply again, but costs for other categories like gasoline fell. A 4 percent drop in airfares in February was a primary driver of the better-than-expected data.Egg prices rose another 10.4 percent in February, as an outbreak of avian influenza continued to exacerbate a nationwide egg shortage. Prices for eggs are up nearly 60 percent since last year. Food prices more broadly rose 0.2 percent, or 2.8 percent from a year earlier.The cost of used cars also rose 0.9 percent in February, although new vehicle prices declined slightly. Car insurance, which was a huge driver of the index’s unexpectedly large increase in January, rose again, but at a much slower pace of 0.3 percent. It is up just over 11 percent over the past year. More

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    Trump’s Unpredictable Tariffs Cloud Europe’s Economic Outlook

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    Policymakers are grappling with “exceptionally high” uncertainty, Christine Lagarde, the president of the European Central Bank, said on Wednesday, just hours after the European Commission announced tariffs on U.S. imports in response to levies imposed by the Trump administration. Later, Canada announced a new round of retaliatory tariffs on U.S. imports.The unpredictability of trade policy and geopolitics, which is likely to mean more large economic shocks, will make it harder for central bankers to keep inflation at their 2 percent target, Ms. Lagarde said.There was a somewhat bewildered mood among some of the E.C.B. officials, economists and analysts at an annual gathering held in Frankfurt, where Ms. Lagarde delivered her speech. Participants reflected on the rapidly shifting economic environment stemming from the escalating trade tensions and a substantial increase in military spending planned by European countries, particularly Germany.Under different circumstances, this year’s conference could have seemed like more of a celebration: Inflation in the eurozone slowed to 2.4 percent in February, near the central bank’s target, and policymakers have been able to cut interest rates six times since the middle of last year.Instead, President Trump’s imposition of sweeping tariffs, and his shifting policies on military aid to Ukraine, are unnerving European leaders. In response, European officials are proposing to borrow more to fund defense and infrastructure investments, significantly altering the region’s fiscal situation. The conference began with one speaker emphasizing the importance of preparing for war in order to avoid war.“Established certainties about the international order have been upended,” Ms. Lagarde said. “Some alliances have become strained while others have drawn closer. We have seen political decisions that would have been unthinkable only a few months ago.”When introducing a panel, François Villeroy de Galhau, the governor of the French central bank, said, “We are aware this environment can change tweet by tweet from one day to the next.” He invited panelists to begin their presentations but noted they could be referring to something that may be reversed by the same afternoon.“We live in a world not only of uncertainty, but still more unpredictability and still more, these last days, irrationality,” he said. More

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    Trump Promised Americans Booming Wealth. Now He’s Changing His Tune.

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    As a presidential candidate, Donald J. Trump promised an economic “boom like no other.”But eight weeks into his presidency, Mr. Trump is refusing to rule out a recession — a striking change in tone and message for a man who rode widespread economic dissatisfaction to the White House by promising to “make America affordable again.”His comments come as the stock market is tumbling — the S&P 500 fell 2.7 percent Monday after falling 3.1 percent last week — and business leaders are spooked about the uncertainty over his tariffs. Even some Republicans, who fear retribution if they cross Mr. Trump, have started to raise concerns about his levies.The moment captures a fundamental challenge for Mr. Trump, a showman who makes absolute and sweeping promises that inevitably run into the reality of governing.The economy Mr. Trump inherited was by many standards in solid shape, with low unemployment, moderate growth and an inflation rate that, while still higher than what the Federal Reserve wants, had declined substantially. But the uncertainty that his policies have injected into the outlook is a jarring contrast with the picture Mr. Trump painted on the campaign trail.“We will begin a new era of soaring incomes,” Mr. Trump said at a rally in October. “Skyrocketing wealth. Millions and millions of new jobs and a booming middle class. We are going to boom like we’ve never boomed before.”That vow to create an economic boom has come into conflict, at least for now, with the president’s favorite economic tool: tariffs. He promised those too during the campaign and, as economists warned, they are the primary driver of the country’s cloudy economic outlook. Forecasts from both JP Morgan and Goldman Sachs say a recession over the next year has become more likely because of Mr. Trump’s tariffs.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 Tariffs and Trade Wars Leave Investors, Once Optimistic, Feeling Apprehensive

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    On Tuesday, President Trump sent markets into another tailspin by announcing additional tariffs on Canada, suggesting a falling stock market is no longer the bulwark investors had hoped.President Trump made a lot of promises on the campaign trail last year. Investors and business leaders enthusiastically cheered some, like lower taxes and relaxed regulation, and expressed wariness about others, like tariffs and reduced immigration.But when Mr. Trump won the election, there was little sign of that ambivalence: Stock prices soared, as did measures of business optimism.Investors at the time offered a simple explanation: They believed Mr. Trump, backed by a Republican-controlled Congress, would follow through on the parts of his agenda that they liked and scale back the more disruptive policies like tariffs if financial markets started to get spooked.It is increasingly clear they were wrong.In his first weeks in office, Mr. Trump has made tariffs the central focus of his economic policy, promising, and at times imposing, steep penalties on allies as well as adversaries. He has threatened to curb subsidies that businesses had come to rely on. And he has empowered Elon Musk’s efforts to slash the federal bureaucracy, potentially putting tens of thousands of federal workers out of jobs and cutting off billions of dollars in government grants and contracts.Most surprising, at least to the optimists on Wall Street: Mr. Trump has so far been undeterred by signs of cracks in the economy or by plunging stock prices.“The idea that the administration is going to be held back by a self-imposed market constraint should be discounted,” said Joe Brusuelas, chief economist at the accounting firm RSM.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