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Business & Economy
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Business & Economy
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Fed sees inflation threat in Trump tariffs
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Federal Reserve Chair Jerome Powell warned Wednesday that President Trump’s new tariffs will likely make it harder for the central bank to bring prices down.
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While Powell did not mention the president by name, he told reporters Wednesday that the Fed is bracing for import taxes to impede its fight against inflation.
“I do think with the arrival of the tariff inflation, further progress may be delayed,” Powell said.
He pointed out that a new Fed economic forecast released Wednesday “doesn’t really show further downward progress on inflation this year, and that’s really due to the tariffs coming in.”
Powell’s comments came after the Federal Open Market Committee, the Fed panel responsible for setting interest rates, declined to bring down borrowing costs after a two-day meeting in Washington.
The Fed was widely expected to keep rates steady despite mounting concerns about the state of the economy and the impact of Trump’s trade agenda.
Powell described economic uncertainty as “unusually elevated,” which poses a challenge to the Fed as it attempts to get ahead of potential price increases.
Read the full report at TheHill.com.
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Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.
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Key business and economic news with implications this week and beyond:
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Purdue Pharma has filed a new bankruptcy plan as part of a $7.4 billion settlement to resolve thousands of lawsuits over the company’s alleged role in the opioid crisis, months after the Supreme Court blocked a prior deal.
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Amtrak CEO Stephen Gardner said Wednesday he would resign from his post in an effort to resolve concerns from the Trump administration.
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Dozens of Social Security Administration offices across the country are expected to close this year as part of the Department of Government Efficiency’s (DOGE) cuts to the federal government.
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IRS shrinks workforce as tax code is set to become more complex
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Welcome to Tax Watch, a new feature focused on the fight over tax reform and the push to extend the 2017 Trump tax cuts this year.
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As Republicans work to pass comprehensive tax reform by renewing the 2017 Tax Cuts and Jobs Act (TCJA) in Congress, the Trump White House is making major cuts to the agency that will need to enforce it.
The IRS is in the process of getting rid of thousands of workers from different parts of the agency, including the taxpayer help service, the compliance division and general operations.
Meanwhile, the already hugely complicated U.S. tax code is set to become even more complex as Republicans work to restore business tax breaks including interest deductibility, research and development expensing and a new depreciation schedule, among many others.
Tax law and tax administration are moving in opposite directions, leading many in Washington to worry about the collection of federal revenues, which already fall short by hundreds of billions of dollars per year.
“What we don’t know is how this tax legislation is going to interact with the massive and haphazard workforce cuts DOGE is trying to impose on the IRS,” Vanessa Williamson, a senior fellow at the left-leaning Brookings Institute, told The Hill.
“The largest proposed cuts will have serious revenue effects—effects on the order of some of TCJA’s more hotly contested provisions! But we’re having a legislative conversation that ignores the IRS entirely,” she said.
— Tobias Burns
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Branch out with more stories from the day:
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KYIV, Ukraine (AP) — Ukrainian President Volodymyr Zelenskyy agreed Wednesday to a limited ceasefire …
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Business and economic news we’ve flagged from other outlets:
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- Dow rises 250 points as Fed still sees more rate cuts this year (CNBC)
- Amtrak’s CEO is stepping down (CNN)
- Treasuries Erase Losses After Fed’s New Growth, Inflation Calls (Bloomberg)
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Top stories on The Hill right now:
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Sen. Lisa Murkowski (R-Alaska) says that few Senate Republicans are willing to speak out against actions by the Trump administration and Elon Musk because most fear for their political lives. Read more
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I rarely agree with President Trump, but his latest controversial statements about Ukraine are mostly true. They seem preposterous only because western audiences have been fed a steady diet of disinformation about Ukraine for more than a decade. It is time to set the record straight on three key … Read more
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Opinion related to business and economic issues submitted to The Hill:
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You’re all caught up. See you tomorrow!
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