"Doctor Doom" Roubini: Fed will not save Trump's trade war

Nouriel Roubini has issued a fresh warning to Wall Street: Traders should scale back their bets that the Federal Reserve will cut interest rates more aggressively to cushion the impact of President Donald Trump's trade war. Dr. Roubini, a prominent economist known as "Dr. Doom" for accurately predicting the global financial crisis, believes the US will avoid a recession and that the Fed will keep interest rates on hold for the rest of the year after the tariff-related policy dispute eases. "It's certainly a Trump-Powell-bottom head-to-head," Mr. Roubini said. "But my point is that the Powell-bottom call-over will be lower than the Trump-bottom, which means Powell will wait until Trump blinks first." Federal Reserve Chairperson Jerome Powell said last week that the economic impact of new tariffs could be much larger than expected, and that the central bank must ensure that it does not lead to a more serious inflation problem. Traders this week have priced in expectations of three to five 25 basis point rate cuts by the Fed, with some on Wall Street even suggesting that the central bank may urgently cut interest rates before its next meeting.