Though there is no specific threat, federal, state and local law enforcement agencies “remain concerned” that New Year’s celebrations in Times Square on Tuesday could be targeted by people seeking to carry out large protests or acts of violence, according to a copy of an interagency threat assessment.

The assessment, compiled and produced by the U.S. Department of Homeland Security each year, reviews the types of threats and potential security concerns with the annual ball drop in midtown Manhattan.

The New York Police Department’s assessment — included in the DHS memo — is that the city and the United States broadly continue “to face a heightened and dynamic threat environment amid ongoing geopolitical conflicts, which may contribute to mobilizing a variety of extremists and malicious actors to violence against mass gatherings, iconic locations, and high-profile events.”

Workers run tests Monday ahead of the New Year’s Eve ball drop in New York’s Times Square. Eduardo Munoz / Reuters

DHS said its concern about people who may attempt “simple, unsophisticated attacks that are difficult to detect in advance” stems from the political climate in the Middle East.

“The Israel-Hamas conflict has created a heightened threat environment; therefore, the Intelligence Community remains concerned about lone offenders encouraging threats of violence against Jewish, Muslim, Christian, and Arab communities in response to the ongoing conflict,” the agency said.

Mayor Eric Adams lauded his city’s first responders Monday and said Times Square will be safe for those ringing in 2025 in the iconic celebration.

“We’ll make sure each one of those who come here to visit and enjoy the ball drop will be safe,” he said. “There’ll be officers in uniform and out of uniform. We’re going to make sure we have the omnipresence of the blue uniform.”

NYPD Commissioner Jessica Tisch said Monday that although there are no specific threats for the celebration, police have been operating under a “heightened threat environment” and remain “vigilant.”

Federal Reserve Chair Jerome Powell sounded his strongest warning to date about the impact of President Donald Trump’s on-again, off-again tariffs.

“The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth,” Powell said on Wednesday during a speech at the Economic Club of Chicago.

Tariffs would raise inflation and slow growth, Powell said, reiterating a point he made earlier this month. They have also weighed heavily on expectations businesses and consumers had about the economy.

“Surveys of households and businesses report a sharp decline in sentiment and elevated uncertainty about the outlook, largely reflecting trade policy concerns,” Powelll said.

The economy now faced “heightened downside risks,” Powell added—a stark acknowledgement of a possible economic downturn for the usually circumspect role of Federal Reserve chair.

In the time since Powell’s latest comments earlier this month, the White House retracted and then reenacted numerous parts of its original widespread tariff policy. Most notably, Trump paused the tariffs announced on April 2 for every country except China, which was hit with additional levies. His administration then granted exemptions for certain products like smartphones and semiconductors, until Trump personally intervened to reverse course on those exemptions. The constant back and forth created a backdrop of uncertainty for businesses and investors, many of whom were still reeling from the market crash Trump’s tariffs caused.

Powell saw it as “highly likely” tariffs would raise prices, but the key question the Fed was still evaluating is how long this would last.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” he said.

One of the key metrics the Fed watches in its assessments of the economy are long-term inflation expectations. If those rise, it means business leaders, investors, and the public at large see inflation as a chronic problem that won’t go away. When that happens, they’re much more likely to cut back on spending, which only raises the likelihood of a recession.

The latest consumer price index report from March measured inflation at 2.4%, slightly lower than expected. However, that read came before Trump implemented his tariff policy.

Since Powell last spoke, the economic turmoil of Trump’s tariffs made its way from the stock market to the bond market. Yields on 10-year and 30-year Treasuries soared at the same time as U.S. and global stocks were cratering. That gave the indication that scared investors were pulling their money out of stocks, and rather than parking it in U.S. bonds, considered the safest investments in the world, were actually selling those assets as well. Those dynamics signaled an unprecedented lack of faith in the U.S. economy.

“There isn’t a modern experience of how to think about this,” Powell said of the recently implemented tariff policy.

The moves in the bond market were unusual, according to Powell, who urged caution about jumping to conclusions about what caused them.

“It’s the markets processing historically unique developments and with great uncertainty,” Powell said. “I think you’ll probably see continued volatility, but I wouldn’t try to be definitive about exactly what’s causing that.”

As is customary, Powell did not tip his hand about upcoming monetary policy moves or when they would happen. Instead, Powell said that the relative strength of the U.S. economy had bought the Fed time before needing to make a decision.

“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” he said.

Trump’s tariffs are almost certain to raise prices for businesses and consumers, which would hamper the Fed’s yearslong efforts to bring down inflation. In that scenario, rate hikes might be warranted. However, that would be a reversal from the rate-cutting cycle the Fed has been in since September. At the same time, rate cuts would be warranted if the U.S. economy enters a recession. The worst-case scenario is stagflation, which is when inflation is high but the economy doesn’t grow. Powell defined that particular scenario as a “challenging” one in which the Fed’s dual mandate goals of full employment and stable prices would be “in tension.”

“It’s a difficult place for central banks to be in,” Powell said.

In short, the range of outcomes for what the Fed might, or should do, is only widening.

The market is currently pricing in between two and three rate cuts in 2025 starting in the second half of the year. But those plans could be subject to change given how volatile things are across the economy.

“Markets are struggling with a lot of uncertainty, and that means volatility,” Powell said.

Summary Trump says rates need to drop immediately

Fed is waiting on rate decisions to be sure tariffs don’t drive inflation higher

Conference Board indicators point to slowing; stocks down, yields higher

April 21 (Reuters) – The U.S. economy could slow unless interest rates are lowered immediately, President Donald Trump said on Monday, repeating his criticism of Federal Reserve Chair Jerome Powell, who says rates should not be lowered until it is clearer Trump’s tariff plans won’t lead to a persistent surge in inflation.

“With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump said in a post on Truth Social.

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The comments, and the administration’s seemingly intensifying pressure on a Fed chair Trump has stated he would like to see gone, sent stock markets lower and bond yields higher as investors and analysts mulled the fallout should Trump ignite a fight over the Fed’s monetary policy independence and try to remove Powell before the end of his term a little over a year from now.

It’s not clear Trump has the authority to do so, and even if successful the Fed’s governance structure would give the remaining board members and regional bank presidents say over interest rate decisions – potentially forcing the White House into a deeper assault on the Fed’s seven-member Board of Governors.

Trump’s repeated threats to fire Powell come as he tries to goad the Fed into quickly cutting interest rates to mitigate a widely expected economic slowdown and possible harm to the labor market due to his tariff and other policies, while Fed policymakers urge caution on concerns inflation, which remains above their 2% target, could be pushed higher by the import taxes.

The Fed next meets on May 6-7 and is widely expected to hold the benchmark interest rate steady in the current 4.25% to 4.50% range.

WEAKER OUTLOOK

The growth outlook and overall sentiment have both been falling as Trump ratcheted up efforts to impose import taxes on goods from major U.S. trading partners and many core products, with top economists raising the estimated odds of a recession this year. The Conference Board’s index of Leading Economic Indicators fell by 0.7% in March, and while still above recession levels “pointed to slowing economic activity ahead,” said Justyna Zabinska-La Monica, senior manager, business cycle indicators, at The Conference Board, with consumer sentiment and manufacturing weakening and stock prices in decline.

While inflation is expected to decline in upcoming readings, there is broad agreement as well that the import tariffs Trump plans to impose will drive it back to perhaps 4% or higher through the rest of the year.

Fed officials say that while that price shock may prove temporary, allowing them to cut rates eventually, they worry it could lead to more persistent inflation that would require them to keep credit conditions tighter.

Chicago Fed President Austan Goolsbee said in comments to CNBC on Monday that the central bank needed more time to see the net impact of Trump’s policies.

“The impact of tariffs on the macroeconomy could potentially be modest,” Goolsbee said. “We don’t know what the impact on the supply chain is going to be so I think we want to be a little more of a steady hand and try to figure out the through line before we’re jumping to action.”

U.S. stocks, which opened lower Monday on investor worries about Trump’s escalating attacks on Powell, slid further after the president’s social media post, with the benchmark S&P 500 Index down 2% on the day.

The rise in Treasury yields is a particularly sensitive point for the administration as it means higher mortgage, car loan and other financing rates for consumers, and more expensive credit conditions for companies. Long-term yields are set by market trading that can be influenced by but are ultimately independent of Fed decisions about where to fix the short-term benchmark it controls directly.

Reporting by Ismail Shakil in Ottawa; Additional reporting by Howard Schneider in Washington; Editing by Doina Chiacu and Andrea Ricci

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The Federal Reserve kept interest rates on hold and called out growing dangers in the US economy amid Donald Trump’s erratic rollout of an aggressive trade strategy.

Jerome Powell, the US central bank’s chair, cautioned that the president’s tariffs were likely to raise prices, weaken growth and increase unemployment if maintained.

Fed policymakers cautioned that “the risks of higher unemployment and higher inflation have risen” as they opted to maintain the benchmark interest rate for the third time in a row. “Uncertainty about the economic outlook has increased further,” they said in a statement.

With inflation expectations – how consumers think prices will move – rising,Powell, the Fed chair, said the “driving factor” appeared to be Trump’s tariffs.

At a press conference, he said: “If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.”

The US president has repeatedly demanded in recent months that the Fed cuts rates – and even raised the prospect of firing Powell, before walking back the comments – as Trump’s tariffs plan appeared to knock the US economy.

The Fed has been sitting on its hands for months, however, citing heightened uncertainty. It last cut rates in December, to a range of between 4.25% and 4.5%.

As Trump pushed ahead last month with sweeping tariffs on imported goods from much of the world, Powell cautioned this would probably raise prices and slow growth – despite the administration’s pledges to revitalize the US economy and reduce the cost of living for millions of Americans.

US gross domestic product (GDP) shrank for the first time in three years during the first quarter, raising fears of recession as Trump’s tariffs – and threats of tariffs – cast a shadow over the world’s largest economy.

Asked whether he was trying to take responsibility for stronger parts of the economy, while blaming his predecessor, Joe Biden, for any sign of weakness, Trump told NBC’s Meet The Press: “I think the good parts are the Trump economy, and the bad parts are the Biden economy. Because he’s done a terrible job.”

After Fed policymakers finished their latest two-day meeting on Wednesday, the central bank reiterated in its statement that they would “carefully assess incoming data, the evolving outlook, and the balance of risks” ahead of future meetings.

Its callout of greater risks in the US economy amounted to “a thinly veiled critique of the new administration’s import tariffs”, said Samuel Tombs, chief US economist at Pantheon Macroeconomics, “and represents an assertion of independence”.

Addressing reporters after the meeting, Powell said he could not provide a timeframe for rate cuts. “We are going to need to see how this evolves,” he said. “There are cases in which it would be appropriate for us to cut rates this year. There are cases in which it wouldn’t. And we just don’t know.”

While concern over the economic outlook is mounting, Powell stressed there had been no “big economic effects” in the data so far. “People, they are worried now about inflation, they are worried about a shock from the tariffs,” he said. “But they really haven’t – that shock hasn’t hit yet.”

Asked how Trump’s demand for rate cuts affected the Fed’s latest decision, and the difficulty of his job, Powell responded bluntly. “Doesn’t affect doing our job at all,” he said.

He reserved perhaps his briefest response for when a reporter asked what he thought when Trump said last month he had “no intention” of firing him – days after saying his termination could not come fast enough. “I don’t have anything more for you on that,” said Powell.

Summary Some in Fed pencil in slower rate cuts on Trump uncertainty

BoJ, BoE, Norwegian, Swedish central banks stress caution

Bitcoin enthusiasm dented by Powell comments

Uncertainty grows as Trump rejects funding bill

WASHINGTON, Dec 19 (Reuters) – The imminent arrival of Donald Trump in the White House was already shaping global economic policy-making this week as the U.S. Federal Reserve flagged fewer rate cuts and other leading central banks signalled caution over their rate paths.

The Fed cut rates as expected on Wednesday but accompanied the move with a message that the incoming Trump administration gave cause for caution – a sentiment echoed by its counterparts in London, Tokyo, Frankfurt and elsewhere.

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As Fed officials dialed back projections for future easing in the face of stubborn inflation, Chair Jerome Powell said some in the bank were trying to judge how Trump’s planned tariffs, lower taxes and immigration curbs might affect policy.

“Some people did take a very preliminary step and start to incorporate highly conditional estimates of economic effects of policies into their forecasts at this meeting,” Powell said of higher estimates for both growth and inflation in 2025.

Powell’s repeated urging of caution around further rate cuts triggered a slide in stock prices. Just a single Fed rate cut is now priced in for 2025.

As expected, the Bank of England kept its main interest rate unchanged at 4.75% on Thursday and said it needed to stick to its existing gradual approach to cutting rates.

“With the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year,” BoE Governor Andrew Bailey said.

Earlier in Asia, the Bank of Japan kept ultra-low interest rates as the threat of Trump’s policies cast a shadow over the export-reliant economy.

“There’s uncertainty over the policies of the incoming U.S. administration, so we need to scrutinise the impact more carefully,” BOJ Governor Kazuo Ueda told a press conference, adding that Trump trade and fiscal policies would have a huge impact on the global economy and financial markets.

Reuters survey of Japanese businesses published last week showed nearly three-quarters expect Trump to have a negative effect on their operating environment.

U.S. President-elect Donald Trump delivers remarks at Mar-a-Lago in Palm Beach, Florida, U.S., December 16, 2024. REUTERS/Brian Snyder/File Photo Purchase Licensing Rights , opens new tab

Norway’s central bank held its policy interest rate unchanged at a 16-year high of 4.50% and highlighted the risk of a trade war between the United States and China.

“Higher tariffs will likely dampen global growth, but the implications for price prospects in Norway are uncertain,” the bank said

Sweden’s central bank cut its key interest rate by a quarter percentage point to 2.50% as expected, but said it now saw reasons to be more cautious about cutting rates in early 2025.

In central Europe, the Czech National Bank paused its year-long rate-cutting campaign as expected, with lingering inflation pressures, especially for services, keeping it cautious.

UPHEAVAL

The U.S. economy was thrown into further uncertainty after Trump pressured fellow Republicans in Congress to reject a bill to keep the government funded past the deadline of midnight on Friday and demanded lawmakers raise the nation’s debt ceiling.

In the past week, the European Central Bank and Bank of Canada had already lowered interest rates. Both are seen easing further in 2025 amid weakening outlooks.

While ECB President Christine Lagarde was vague about further rate cuts, she went out of her way to emphasize downside risks to growth, including from prospective trade tensions with the United States under Trump.

Although Trump may have been just at the periphery of officials’ thinking at the Fed, he was a central focus in Ottawa when Canadian Finance Minister Chrystia Freeland quit after clashing with Prime Minister Justin Trudeau on how to handle possible U.S. tariffs under the next U.S. administration.

Meanwhile, crypto market enthusiasm for Trump’s notion of establishing a strategic reserve of bitcoin was dealt a setback when Powell said that the Fed had no legal authority to hold it and no plan to seek a change in the law so that it could.

The remark contributed to a broad slide in crypto-related assets, including a 5% drop in bitcoin itself, its largest decline in more than three months.

Reporting by Dan Burns and Howard Schneider; additional reporting by Leika Kihara in Tokyo; Editing by Mark John, Andrea Ricci, Sam Holmes and Emelia Sithole-Matarise

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