Global financial markets under the shadow of US policy

The Federal Open Market Committee (FOMC) recently maintained interest rates at 4.25%-4.50%, reflecting a cautious approach amid economic uncertainty.

- Dr. Rajiv Khosla

This decision comes as core inflation remains elevated at 2.8%, well above the Fed's 2% target, and GDP growth expectations are revised downward to 1.7%. The combination of high inflation and sluggish growth raises concerns about stagflation in the US.

Federal Reserve Chairman Jerome Powell acknowledges that President Trump's policy measures—reciprocal tariffs and spending cuts—add to economic uncertainty. These policies complicate the Fed's efforts to balance inflation control and labor market stability. Tariffs are expected to increase input costs, push consumer prices higher, and hinder economic growth.

The tension between persistent inflation and slowing growth presents a complex challenge that extends beyond the US. Powell's policy decisions now play a crucial role in shaping global financial stability. This article examines how the clash between Trump's economic policies and the Fed's monetary strategy is creating a volatile global economic landscape.

Surge in gold prices

The uncertainty surrounding US economic policies has driven investors toward safe-haven assets. Research from leading financial analysts, published in sources like The Wall Street Journal and The Financial Times, indicates that concerns over tariffs disrupting global supply chains are fueling inflationary pressures, making gold increasingly attractive.

Additionally, data from the World Gold Council (WGC) shows that central banks, especially in emerging markets, are significantly increasing their gold reserves. This strategic move reflects efforts to hedge against currency fluctuations and potential economic instability.