BIS Warns Trump Trade Policies Risk US Inflation Resurgence

Inflation and trade policies remain central concerns for the U.S. and global economies, with varying assessments of the impact of President Trump's tariffs. The European Central Bank's Christine Lagarde highlighted rising inflation unpredictability due to global disruptions such as the COVID-19 pandemic and geopolitical tensions, emphasizing the ECB's commitment to a 2% inflation target despite recent rate cuts. While some analysts and reports, including the Bank for International Settlements, warn that Trump's tariffs have caused economic volatility and could reignite inflationary pressures, recent data shows the tariffs' direct effect on U.S. inflation remains limited, with consumer spending and income changes playing a more significant role. Retailers and manufacturers are responding to trade uncertainties with rising prices and reduced inventories, as seen in sectors like footwear, indicating inflation pressures amid supply chain challenges. Despite these pressures, some sources report that the U.S. economy continues to perform robustly, without the dramatic inflation spikes or recession fears previously predicted. Overall, the economic outlook is cautious, with mixed signals on inflation and demand keeping policymakers in a watchful mode.