Fed Could Hike Rates As Trump Tariffs Spur Inflation

Investors should rule out nothing from the Federal Reserve in 2025 if the newly minted Trump administration uncorks fresh tariffs on China and the European Union (EU), Bank of New York Mellon CEO Robin Vince told Yahoo Finance editor Brian Sozzi at the World Economic Forum (WEF) in Davos, Switzerland.

Trump has threatened 25% tariffs on Canada and Mexico and possibly one as high as 100% on China if a deal on TikTok wasn’t reached.

"I think rate hikes are possible. Anything is possible. You've got to be prepared. Being resilient really matters," Vince said.

"It doesn't feel like the most likely outcome. To me, the Federal Reserve has been on a path that looks like they can pause for a little while and take stock of where things are."

On his first day in office, Trump wasted no time stoking tariff concerns.

He threatened 25% tariffs on Canada and Mexico and possibly one as high as 100% on China if a deal on TikTok wasn’t reached.

"I think the lesson that we've learned over the past 15 years is banks have added a lot of capital. Banks have added liquidity. The regulators have done a terrific job making the system stronger," Vince said.

"Let's go out and use it for the very purpose for which banks are created, which is to be able to help grow and help clients and individuals be able to be successful."

Morgan Stanley analyst Betsy Graseck said, “We also see scope for deregulation under the Trump administration, which should reinvigorate retail trading [benefiting brokers] and create scope for private markets’ access into the retirement channel.”