Trump trade war: US central bank cuts growth outlook
The US central bank has slashed its expectations for economic growth this year as it eyes challenges on several fronts amid Donald Trump’s escalating trade war.
The Federal Reserve announced, as was widely expected, that it would keep its main interest rate at its current target range level of 4.25%-4.5% following the latest meeting of its Federal Open Markets Committee.
The statement that accompanied that decision showed slightly elevated expectations for inflation but also a forecast that the annual rate of economic growth this year had been cut from 2.1% to 1.7%.
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The reduction partly reflected weaker consumer spending, the Fed said, adding that could be partly explained by the threat of rising prices due to the tariff agenda.
The central bank admitted rising uncertainty over its dual mandate which covers employment as well as inflation.
At a news conference to accompany the decision, Fed chair Jay Powell said: “The economy is strong overall”, adding that labour market conditions were “solid”.
But on the question of rising goods inflation he said: “A good part of it is coming from tariffs”, adding that it was too soon to split non-tariff and tariff-related inflation in the data.
Fed chair Jay Powell takes reporters’ questions. File pic: Federal Reserve
The core message was that it was too early to predict the impact overall.
Policymakers said risks had increased, with a near unanimous sentiment in saying the outlook for the year was muddled but it stopped short of directly blaming the protectionist policies being pursed by the Trump White House.
The Fed revealed its hand less than 24 hours before the Bank of England was expected to follow suit by also holding off on any fresh rate cut amid risks of surging prices due to the growing trade war uncertainty.
The Fed meeting took place against a backdrop of mounting concern among financial markets and economists that the trade war could lead the world’s largest economy into recession.
Stock market values are well down on where they started the year, with the broad-based S&P 500 losing $4trn in the space of less than a month at one stage as the tariff threats intensified.
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The dollar remains around five cents down against both the pound and euro while US government borrowing costs also remain elevated.
Stocks rebounded somewhat on the Fed’s update as it signalled no immediate pressure for a policy shift, with the statement signalling that two rate cuts remained on the cards over the remainder of 2025.
But US economists are particularly worried about the trade war involving the country’s nearest neighbours Mexico and Canada – yet to get into full swing as had been threatened due to several suspensions by the Trump administration.
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The main domestic concern is that tit-for-tat tariffs will hammer cross-border supply chains and wider trade, leaving US businesses drowning under a mountain of red tape and higher costs, the latter being widely tipped to be passed on down supply chains and ultimately hitting consumers.
Trade war hostilities between the three are set to ramp up from 2 April – a day after the EU retaliates to US steel and aluminium tariffs with duties being applied to US goods worth €26bn.
Mr Trump has already threatened to respond with 200% tariffs on EU alcohol imports including wine and spirits.
Business
Former sub-postmaster Lee Castleton becomes first individual to sue Post Office and Fujitsu after uncovering ‘fraud’
A sub-postmaster made famous for being portrayed in the ITV Post Office drama is taking the state-owned body and Fujitsu to court.
Lee Castleton has become the first individual former sub-postmaster to launch High Court action against the Post Office and the maker of the Horizon faulty computer software.
It was the Horizon accounting software created by Fujitsu that wrongly generated financial shortfalls, making it appear that Mr Castleton owed the Post Office money.
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Mr Castleton wrongfully had a judgment issued against him in 2007 for taking £25,000.
He is bringing the challenge against the organisations after it emerged Fujitsu withheld its error log during the prosecution.
Had it been included it would have been clear Horizon contained bugs, errors and defects.
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Mr Castleton spoke to Sky News about evidence heard at the inquiry in January 2024.
This failure to disclose means the judgment against him was obtained by fraud, he will argue.
“We also believe the judgement was obtained by fraud in that the Post Office and Fujitsu knew perfectly well that the Horizon system wasn’t working properly,” his solicitor Simon Goldberg said.
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The Post Office and Fujitsu maintained there were no errors with Horizon until 2019.
While prosecutions against sub-postmasters have been overturned en masse through one-off legislation, the civil judgment against Mr Castleton was not captured by the law and still stands.
Uncovered fraud
The revelation that information was withheld from Mr Castleton during his trial came out during the public inquiry into the Post Office Horizon scandal.
The inquiry was established to create a clear account of the implementation and failure of the Fujitsu-created software.
As part of the scandal, more than 700 sub-postmasters were prosecuted for theft and false accounting.
Many more, like Mr Castleton, were declared bankrupt as they struggled to plug the imagined shortfalls.
The judgment also destroyed his business, livelihood, and reputation in his community.
It had a devastating long-term impact on his and his family’s health.
He was awarded an Order of the British Empire (OBE) in the New Year’s honours list.
The Post Office and Fujitsu have been contacted for comment.
A humanoid machine called Apollo has just taken a tentative, slightly jerky, but significant step forward in the robot revolution.
The 5’8″ tall robot performed the first public demonstration in a real-world setting of a real-world task – in this case assembling an engine part – entirely autonomously.
Clicking two parts together with a twist of its servo-controlled wrists, and handing it to a human colleague is a basic task. But it’s also an important moment in the much-hyped world of human-like robot development.
Mercedes-Benz is testing the use of Apollo, a humanoid robot from Apptronik. Pic: Mercedes Benz
“This is a really big day for us,” says Jeff Cardenas, chief executive of Apptronik, the US company behind Apollo.
“We’re excited to show this off, excited for the public to see the robot live and in person.”
Mercedes-Benz has announced a multimillion-pound investment in Apptronik and is trialling a handful of the humanoid robots at its factory in Berlin and another in Hungary.
Investors and industrial firms – particularly car makers with long experience of using robots in manufacturing – have been closely following the development of human-like robots.
The costs of small, lightweight components have fallen as artificial intelligence (AI) algorithms and computer vision technology have led to rapid advances in the field of robots that can emulate human movement and tasks.
But despite a rising number of increasingly impressive-looking cyborgs being unveiled by tech companies in the US and Asia, few have taken their first steps out of the lab.
The Apollo robot looks small and underpowered surrounded by the huge robotic arms that weld, bolt and inspect Mercedes’ latest cars at the Berlin-Marienfelde plant.
But hosting a robot with a human “form-factor” is more than just a photo opportunity, according to Mercedes-Benz.
“There’s one big advantage,” says Jorg Burzer, head of production and supply chain management at the German car maker.
“A humanoid robot is flexible, so you can basically introduce it to an assembly line or internal logistics or quality inspection… you can basically move it from one place to another.”
Mercedes-Benz has announced a multimillion-pound investment in humanoid robots. Pic: Mercedes-Benz
Introducing a new assembly line, or upgrading an old one with traditional robotic arms is a major investment.
A robot that can be adapted to a range of tasks and work alongside humans would avoid that investment.
With hands and feet like ours, they can operate tools and work in the same workspaces as people.
Apollo can lift more than 25kg and potentially perform repetitive tasks that are, in the words of humanoid robot developers, too “dull, dirty or dangerous” for humans.
Apollo is 5’8″ tall and can lift 25kg
The purpose of the trial is to establish which tasks humanoid robots can usefully do and help improve the machine learning and dexterity required to do more.
“We want to try to find out what is really possible,” says Mr Burzer.
“It’s also very important to test how a humanoid robot can be integrated in running production together with our colleagues working here every day.”
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Texas-based Apptronik is reluctant to make claims as bold as some of their rivals.
“Everyone’s ready for a robot to come into their home and do all of their laundry and all the things that they don’t want to do. But it’s very early on,” says Mr Cardenas.
“Take the analogy of the shift to the personal computer. We’re in the early ’80s so at the very beginning.”
Investors seem to believe in a robot-dominated future. One recent forecast sees the humanoid market growing 20-fold in the next eight years, with predictions of a population of tens of millions of the machines by 2050.
One major hurdle is the AI brains behind them.
Apptronik admits a truly “general purpose” robot capable of functioning outside a predictable and controlled environment like a factory won’t be possible until computer intelligence can understand the real world like we do.
So-called “world models” are very much a work in progress for AI developers.
So the important questions, like when humanoid robots will steal our jobs, or whether they will go rogue and rise up against us can wait… for a little while at least.
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