What happens when central banks face a double threat: trade turmoil and stubborn inflation? The latest Federal Reserve meeting minutes reveal policymakers deeply divided. Most officials saw upside risks to inflation—fueled by President Trump's tariffs—outweighing labor market worries. Despite visible cracks in employment data, only two out of 18 Fed members voted to cut interest rates, marking the first multi-governor dissent in over three decades. The result? Rates held at 4.25%–4.5%, as the committee painted a picture of "tepid" growth but still-pronounced price risks.
The US isn’t alone in conundrum mode: New Zealand’s central bank fought a similar battle this week, trimming rates but warning that tariffs and global uncertainty continue to sap confidence and slow recovery. The unifying thread: even as inflation expectations start to ease in some economies, tariffs and trade policy remain stubborn wild cards disrupting traditional central bank playbooks.
