Economists: Tariff uncertainty challenges the Fed's "data-dependent" policy stance

According to the Financial Times, on March 17, economists believe that the uncertainty of Trump's tariffs has complicated the efforts of the "data-dependent" Federal Reserve to send a clear message about the direction of the economy. As the Federal Reserve prepares to announce its latest interest rate decision on Wednesday, data released last week showed inflation slowed more than expected in February, providing support for a resumption of rate cuts later this year amid signs of slowing economic growth. However, policymakers are also weighing concerns that promised trade tariffs could exacerbate inflation or trigger an economic slowdown – or both. Joe Brusuelas, chief economist at tax and advisory firm RSM US, said: "The promise of future tariffs essentially sets aside [the Fed's] data-dependent target, meaning they will have to rely more on forecasting frameworks." "While the Fed is widely expected to keep interest rates unchanged this week, investors will be keeping a close eye on the economic projections of Fed officials, as well as Fed Chair Jerome Powell's post-meeting statement. These projections show their view of the level of interest rates in the coming years.