Tariff Tempest: U.S. Economic Winds Stir Global Stagflation Fears

The U.S. economy is facing slower growth and increased inflation, which could lead to global stagflation. Central banks worldwide are assessing the impact of President Trump's tariffs on international trade, as concerns rise about economic policy uncertainty and its implications for growth and inflation.

The United States, once a beacon of economic growth, is now facing the dual threat of slowing output and rising inflation. This stagflationary trend is stirring significant concern among global central banks, as they grapple with the repercussions of President Donald Trump's aggressive tariff policies.

Central banks, including the Bank of England and the Bank of Japan, have held interest rates steady, highlighting how Trump's trade tariffs have clouded the global economic outlook. European Central Bank President Christine Lagarde warned that U.S. tariffs, compounded by potential EU retaliation, could dent growth and accelerate inflation.

With the IMF warning of a looming trade war's impact on the global economy, the Federal Reserve's recent projections indicate a future marred by uncertainty. Fed Chair Jerome Powell admitted the difficulty of forecasting in an environment rife with elevated uncertainty, as the U.S. foresees slower growth and higher inflation.

(With inputs from agencies.)