Minneapolis Federal Reserve President Neel Kashkari warned on Sunday that the risk of a recession triggered by President Donald Trump’s ongoing trade war will depend on how quickly uncertainties with key trading partners are resolved.
In an appearance on CBS’s Face the Nation, Kashkari described the current situation as a “huge hit to confidence” and the most significant economic shock he’s witnessed during his decade at the Fed, second only to the onset of the COVID-19 pandemic in March 2020. He emphasized that such a loss of confidence could have wide-ranging consequences for the economy.
Kashkari noted that even moderate tariff increases, whether 10%, 50%, or 100%, could disrupt trade flows dramatically, leaving sectors concerned about the potential long-term impacts. He added that the Fed’s role remains focused on controlling inflation to prevent interest rates from rising further.
On the state of the broader economy, Kashkari remarked, “Investors in the US and around the world are trying to determine what the new normal in America is.”
Despite the turbulence, Kashkari assured that markets are still functioning, with trade continuing, suggesting a degree of resilience in global commerce.
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