With the United States striking a deal to avoid tariffs, it’s the Federal Reserve that holds the key to the economy in its hands.
They have that power by virtue of the fact that they could cut interest rates, something they haven't had to do lately. Sam Rines with Avalon Advisors tells KTRH cutting rates, which could happen even without tariffs (remember there are still issues with China), would allow Trump to continue his trade policy.
“It could, but it would require immediate cuts to avoid the future consequence of tariffs,” Rines said.
So, the question is this. How much do tariffs matter to the Fed and what their plans are?
“It’ll be difficult to see just how much they matter in the grand scheme of things for a rate cut or two,” Rines stated.
But there is another factor that could play a role. With only 75 thousand jobs added in the May employment report Friday there have been calls made for an interest rate cut. And that is despite the fact that the deal with Mexico is drawing praise from Texas Congressmen like Kevin Brady of the Woodlands, who called the deal a win for both Texas and the United States.