Fear of a tariff 'Trumpcession' puts pressure on Bank and Fed over rates

A trade war could push up inflation when both economies really need cheaper borrowing. So what's a central bank to do, asks Phillip Inman

- Phillip Inman

Monetary policymakers on both sides of the Atlantic will be considering how seriously to take Donald Trump's threats of an all-out trade war as they give their verdict on the path of interest rates this week.

The Federal Reserve, the US central bank, will examine the prospect of a “Trumpcession” brought on by tariffs that send import costs rocketing and convince consumers, already shellshocked from the cost of living crisis, to stop spending.

Consumers are the engine of the US economy and confidence levels plummeted last month, according to the Conference Board's index of buying intentions, a leading survey. The index covering February registered the biggest monthly decline in nearly four years.

There are growing concerns that the president does not care how far the stock market may fall while he battles Washington’s main trading partners and, worse, that he is sanguine about a fall in output which, if it continues, could bring about a full-blown recession.