Fed Report Shows Stable Growth, Rising Tariff Pressures
The Federal Reserve’s latest Beige Book showed little overall change in economic growth, with labor markets remaining stable but demand muted across most regions. Inflation pressures increased as companies faced higher costs from President Trump’s tariffs, with some firms absorbing the impact while others passed it on to customers. Consumer spending softened slightly, though higher-income households continued to spend on luxury goods and travel. The Fed will closely watch the upcoming Consumer Price Index report later this month for further signs of inflation ahead of its next policy meeting.
Powell Hints at More Rate Cuts
Federal Reserve Chair Jerome Powell said the Fed is nearing the end of its balance sheet reduction program, suggesting that reserves are close to “ample” levels for banks. Speaking in Philadelphia, he also indicated that softening labor market data increases the likelihood of further interest rate cuts in the months ahead. Powell emphasized the challenge of balancing the risks of easing too quickly versus allowing unnecessary job losses. While maintaining that inflation progress remains incomplete, he said current conditions point toward a slower economy and a potential policy pivot soon.
U.S. Targets China’s “Nonmarket” Tactics as Earnings Boost Markets
U.S. Treasury Secretary Scott Bessent said the Trump administration will impose price floors across key industries to counter China’s use of below-market pricing to dominate sectors like rare earths. The move marks a shift toward more active industrial policy as trade tensions escalate. Meanwhile, Bank of America and Morgan Stanley posted standout earnings, fueling a rally that pushed the Russell 2000 to record highs and lifted the S&P 500 and Nasdaq. Despite tariff-related cost pressures noted in the Fed’s Beige Book, strong corporate results continue to support equities — though upcoming tech earnings could determine whether the rally holds.
