US Inflation on the Rise: Trump's Tariffs and Economic Implications

US inflation saw an uptick last month due to rising gas, eggs, and used car prices, casting doubt on potential Federal Reserve interest rate cuts. Contributing to uncertainty are proposed tariff policies from President-elect Donald Trump, which may slightly increase inflation, influencing future Fed rate decisions.

US inflation likely increased last month, driven by surging prices for gas, eggs, and used cars. This trend may reduce the likelihood of the Federal Reserve reducing its key interest rates significantly this year, as ongoing price hikes continue to concern economists and financial markets alike.

While economists expect some relief in inflation in the coming months, President-elect Donald Trump's proposed policies, including increased tariffs on imports and mass deportations, add to the uncertainty. Trump plans to establish an 'External Revenue Service' to manage these tariffs, potentially causing slight inflationary effects.

Fed Chair Jerome Powell stresses maintaining the Fed's interest rate until inflation reaches the 2% target. However, expectations for limited rate cuts persist due to inflation prospects and Trump's impending tariffs. Despite resilient consumer spending, there are fears of increased inflation as demand could surpass production capabilities.

(With inputs from agencies.)