The prospect of rising inflation in the world’s largest economy has led investors to pare back bets on the US Federal Reserve cutting interest rates since Trump’s return to office, amid mounting concern over the fallout from a global trade war.
He argued that despite optimism about the US economy at the turn of the year, the uncertainty created by Trump’s on-off tariff plans and the president’s apparent contempt for the rule of law would deter investment.
Scott Bessent, the US Treasury secretary, has suggested the administration wants to bring down 10-year US Treasury yields, an important interest rate, which would have a knock-on effect across global markets.
Stiglitz, a Columbia University professor and former World Bank economist who served as chair of Bill Clinton’s council of economic advisers, said the Fed was “clearly worried” about the inflationary effects of Trump’s policies, which could lead it to raise interest rates.
Donald Trump’s tariff threats have made the US “a scary place to invest” and may unleash stagflation, the Nobel prize-winning economist Joseph Stiglitz has said.
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