Swamp Notes: The Federal Reserve’s tariff dilemma

FT News Briefing

Forhecz Topher

News, News & Politics, Daily News

4.4 • 1.2K Ratings

🗓️ 12 April 2025

⏱️ 19 minutes

🔗️ Recording | iTunes | RSS

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Summary

US President Donald Trump’s global trade war has made a mess for the Federal Reserve. Despite an encouraging US consumer price index report this week, there are major concerns about the inflationary nature of Trump’s tariffs. Meanwhile, the Fed has cut growth forecasts. And if all that wasn’t enough, Trump is breathing down chair Jay Powell’s neck to cut interest rates. The FT’s US economics editor Claire Jones and economics commentator Chris Giles explain why the central bank is caught in a difficult position.

Mentioned in this podcast:

Jay Powell’s tariff dilemma: defend the economy or contain inflation

Alphaville: An emergency rate cut from the Fed?

US inflation falls more than expected to 2.4% in March

Federal Reserve ‘absolutely’ ready to help stabilise market if needed, top official says

Swamp Notes is produced by Katya Kumkova. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. Special thanks to Pierre Nicholson.

Read a transcript of this episode on FT.com

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Transcript

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0:00.0	We're Equinor, an energy company searching for better. Currently, we supply 27% of the UK's gas,
0:07.0	15% of its oil, and we're playing our part in the UK's energy transition. In 2023, we invested
0:14.1	20% of our global gross spend in renewables and lower carbon solutions. Today, our wind farms power
0:20.0	750,000 homes, and we expect this to grow to
0:23.3	over 7 million UK households. We're an energy company searching for better. Equinor.com.uk.
0:32.1	It's a weird time to be fed chair, J. Powell. Markets are roiling. Inflation may or may not be cooling, and you have a very
0:40.9	angry president, truth-socialing at you about rate cuts. What's a Fed Chair to do?
0:53.3	This is Swamp Notes, the weekly podcast from the FT News Briefing where we talk about all the things happening in U.S. politics.
0:59.6	I'm Mark Filipino, and this week we're asking, what does a week in the trade wars tell us about Powell's next move?
1:06.1	Here with me to discuss is the FT's incoming U.S. economics editor, Claire Jones.
1:10.3	Hey, Claire, welcome to the US.
1:11.8	Thank you, Mark. Great to be here. And we've also got our economics commentator Chris Giles,
1:17.2	who writes our central bank newsletter. Hey, Chris. Hey, Mark. Good to be here, too. So I don't want to
1:22.9	presume anything, but I'm assuming that you guys aren't, you know, psych to take up the role of Fed
1:27.4	cheer anytime soon, given the tumult.
1:31.4	No, indeed not. I mean, you've got a feel for Powell. It was all going so well for him last year.
1:36.9	We were seeing a perfect soft landing. The Fed was beginning to cut interest rates after inflation
1:42.2	fell quite sharply. Now, the situation looks very different,
1:46.8	and his job looks an awful lot harder. Yeah, it's super hard. I do not envy that guy.
1:53.6	Chris, let's start with the state of play. That was a great background, Claire. A new inflation report
1:58.6	came out just the other day in the U.S. The consumer price index is now down to 2.4%, which is actually better than expected and closer to the Fed's 2% target rate.
2:09.3	Now, that's helpful for you as President Donald Trump because he wants to lower interest rates.
	...

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