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US real GDP decreased for 0.3% in the first quarter of 2025 according to advance reading as panic purchases ahead of tariffs fueled imports. The advance reading of US real GDP, published by the Bureau of Economic Analysis last Wednesday showed that it contracted at an annual rate of 0.3%. This is the first reversal after nearly 3 years of solid economic growth. Tariff-related uncertainty accelerated foreign imports and spending, and raised fears of a potential recession. The economic slowdown p

How will interest rate cut play out facing the current tariff war? An unsuccessful tariff negotiation may lead to bigger and sooner rate cuts. The current tariff negotiation faces two scenarios. The first scenario is that negotiations lack substantial progress, and tariffs remain high after 90 days. The Trump administration would maintain a 10% baseline tariff on major trade partners, a 25% tariff on imported automobiles and auto parts, as well as tariffs against China, resulting in an effectiv

Rate cut expectation fluctuates amid Trump-Powell power fight, Fed presidents stand for “modestly restrictive” monetary policy. During his speech last week, Fed Chairman Powell stated that the impact of trade policy could potentially pull the Fed away from its dual mandate of full employment and price stability. While currently there is no conflict between these two goals, Powell noted that the Fed will not be ending its balance sheet reduction (QT) soon and will continue to focus on the 2%