Investing.com — The Federal Reserve’s rate cut of 25 basis points was accompanied by a higher inflation projection, with Macquarie analysts saying the hawkish tone was influenced not only by economic data but also of potential policy shifts under the administration of Donald Trump.

“It is imperative that policymakers collectively reflect on the items on Trump’s policy agenda before implementing them, even if they do not accept them,” the analysts wrote.

Jerome Powell called the decision a “close call,” reflecting internal uncertainty about inflation risks. The Fed’s Summary of Economic Projections (SEP) pegged a 0.4% and 0.3% jump in headline and core inflation for 2025, respectively.

Observers speculate that the Fed is preemptively considering tariffs driven by Trump’s policy agenda, despite Powell’s reluctance to directly link monetary policy to future policy scenarios.

But Trump’s tariff policies have steered the world’s central banks in the opposite direction with major foreign central banks expected to respond with a dovish approach to counter the disinflationary pressure caused by the actions of US trade.

“This has distanced the BoJ of Japan from the prospect of a policy rate hike, either now or in January. Even the BoE sees the wisdom of remaining open to Bank Rate cuts due to Trump’s tariffs. Foreign CBs’ struggling’ with Trump’s tariffs with a dwindling currency,” the analyst added.

The contrasting policies pushed the US dollar higher, tightening margins for American exporters. Meanwhile, foreign central banks are seen as protecting competition by maintaining weaker currencies.

“If there is a theme here, it is that while Trump’s US import tariff agenda has made the Fed ‘hawkish’, it has affected other CBs in the opposite way – to dovishness.”