Fed Officials Signal Caution on Rate Cuts Amid Tariff Uncertainty

Bank of Korea Governor Rhee Chang-yong has dismissed speculation regarding an imminent interest-rate cut, advocating instead for swift fiscal stimulus to support South Korea's struggling economy, which faces challenges from potential US tariffs under President Trump. Meanwhile, the Federal Reserve has paused its rate-cutting cycle after three consecutive reductions, with officials expressing caution in light of economic uncertainties linked to Trump's tariff policies. Richmond Fed President Thomas Barkin indicated that while further cuts are possible, they depend heavily on economic conditions and the impact of tariffs. Other Fed officials echoed this sentiment, emphasizing a wait-and-see approach regarding inflation and its sources, distinguishing between pressures from tariffs and overall economic demand. As the situation evolves, both the Bank of Korea and the Federal Reserve are navigating complex economic landscapes influenced by international trade dynamics. The Fed's cautious stance comes amid concerns that new tariffs could exacerbate inflation, complicating future monetary policy decisions.