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The U.S.
Federal Reserve is expected to cut interest rates for the first time since December, but the vote may be far from smooth.
It's World Business Express from the BBC World Service.
I'm Leanna Byrne.
We'll look at how tomatoes are becoming the latest culprit pushing up grocery bills in the U.S. and the scoop at Ben & Jerry's.
Its founder has called it quits.
The world's most powerful central bank is back in the spotlight.
The us federal reserve is expected to cut interest rates for the first time since december by a quarter of a point.
And listen, i can hear you now.
Why should i care about interest rates?
Well, interest rates are the price of borrowing money.
When they come down mortgages, car loans, credit cards they get cheaper.
It's something that touches every part of the economy, from jobs to the price of your groceries, which is why US President Donald Trump has been piling on pressure for a big interest rate cut.
But the vote could be anything but smooth.
Covering this for us in New York is our correspondent, Michelle Flurry.
Michelle, what are the divisions we could see at this Fed vote?
Well, I mean, usually the Fed is pretty consensual, but we're expecting to see dissent from two directions.
On the one hand, you're going to exceed divisions over how much the US economy is actually softening.
People have different opinions about how big an impact tariffs are having on the economy.
On the other hand, there are also divisions driven by politics.
We know President Trump is pushing for a bigger rate cut.
Will that feed through into some of the dissents we see?
How unusual is that pressure coming from Donald Trump?
Look, I mean I think you have to go back to the 60s, to the last time we really saw this much kind of pressure being applied on a Federal Reserve governor.
But Donald Trump is taking it further.
And that's what makes it so unprecedented with his attacks on other Federal Reserve governors.
So I think, you know, people are beginning to question how independent is this Fed going to be?
You'll be happy to know, Michelle.
We'll hear from someone who sat on the Fed all about that.
Michelle Flurry in New York.
Thank you so much.
Now, as we mentioned, one reason the Fed might cut interest rates is to tame inflation.
World Business Express's BC Adebayo explains how one staple food is driving up your grocery bills.
Tomatoes.
Fresh, juicy and found in salsa, sauces, salads and even burgers are more than just a staple.
They're a major part of the American diet.
But right now the cost of tomatoes is climbing sharply and that's feeding into a bigger story food inflation.
Grocery prices are already rising faster than many other household costs, and many point to a new wave of import tariffs as the major driver.
They raise the cost to bring these imports into the United States and they can push up the retail price of tomatoes.
David Ortega, Ford economist and professor at Michigan State University, explains.
We import a large quantity of tomatoes from Mexico, especially during our winter months.
Mexico supplies about two-thirds of the fresh tomatoes Americans eat.
Experts estimate tomato prices could rise 7 to 10 percent, adding extra strain to family budgets.
Justin DeLeon, co-owner of a Polonius pizzeria in Los Angeles, says the impact is already squeezing small businesses like his.
The tariffs, they are what they are.
But for us, you know, we take the hits and we never raise the prices on our customers.
But not everyone is against the tariffs.
Robert Gunter, executive vice president of the Florida Tomato Exchange, which represents about 90 percent of Florida's growers, says the move helps protect US farmers.
Back when this first started in 1996, domestic industry, not just Florida, represented about 75 80 percent of the market.
And now we're down to 25 to 30 percent of the market.
This potentially gives them hope to be able to look at different ways they can expand their production here.
It's not going to happen overnight.
It takes time.
But certainly, I think long term, it gives them a much more stable ability to plan in the future.
And even among importers, there's some optimism.
I'm looking at it as a positive thing.
Jaime Chamberlain, president of Chamberlain Distributing an American importer of Mexican fruit and vegetables, believes tariffs could help stabilize the market over time.
There are a lot of people who said, oh my God, is it the uncertainty of the next 90 days?
Well, let me tell you something.
I'd rather that the governments get it right than get it wrong.
Tomatoes are central to America's food culture, from the farm to the grocery aisle to the pita oven.
The question is how much are consumers and small businesses willing to pay to keep tomatoes on the table?
That's a question BC Adebayo reporting.
So what's it like inside the Fed when the political pressure is this intense?
Frederick Mishkin is an American economist and a former member of the Federal Reserve's Board of Governors.
The Fed's very concerned about that.
They're very concerned that the rise in prices that's occurring as a result of tariffs could lead to higher inflation expectations.
And that actually is a very bad outcome because then inflation gets to be permanently higher.
And that's what they're really scared of.
And so, as a result yes, they are going to cut rates this time, but maybe not as fast as people expect or as would be normal if, in fact, there wasn't this fear that the tax on the Federal Reserve's independence would lead to higher future inflation and therefore higher inflation expectations.
So this is the dilemma the Fed is facing, a much more complicated environment than is typical.
People who are advocating for interest rate cuts faster.
They're saying that it's going to help the economy grow.
What are your thoughts on that, though?
Well, I think that that's absolutely correct.
And, as I said, under normal circumstances, with a supply shock of the type that we've had as a result of tariffs, the Fed.
Basically, if the economy is weakening and they're actually restrictive in their policy, it actually makes sense to cut, and cut more aggressively.
This is a very unusual situation because a central bank has to look to the long run.
This is one of the reasons why central bank independence is so important.
Thinking about the short run, we all love low interest rates.
Nobody likes high interest rates because it means it's more expensive to buy a house, more expensive to finance a car.
On the other hand, if you pursue short run policies, Trump is advocating that the interest rates be lowered by on the order of three percentage points.
If you do something like that, the long run, you don't do very well.
If you were in that room today, how would you vote?
I would actually vote to cut rates to 25 basis points.
In fact, if I weren't worried about the independence of the Federal Reserve and the inflation expectations rising, I would advocate even greater decrease in rates.
I think under normal circumstances, the Fed should be more aggressive.
But the world is not normal now.
I was former member of the Fed, Frederick Mishkin.
Russ Mould, Investment Director at AJ Bell, is here.
Russ, markets love the idea of cheaper money, but the dollar has been sliding ahead of that meeting.
So what's our take on this?
I think the markets are convinced there will be three interest rate cuts before Christmas.
So definitely an expectation of lower rates and cheaper money in America.
Generally seen as good for the economy.
Probably negative for the dollar because the Fed has been slow to cut relative to other countries so it's now playing catch-up and Japan may even still be raising rates.
And normally a weaker dollar seen as good for global growth.
Good for commodity prices, good for developing and emerging economies, a lot of whom borrow in dollars, so it gets cheaper for them too.
Okay, Ross, thank you.
Some of the biggest US tech names Microsoft, Nvidia and Google are pledging more than 40 billion of investment in the UK.
It was announced during President Trump's state visit.
Meanwhile, Nvidia's boss told the BBC he's disappointed by reports that China has ordered its top firms to stop buying the company's AI chips.
And finally, after almost 50 years, Ben & Jerry's co-founder, Jerry Greenfield, is leaving the ice cream maker.
He says the brand has lost its independence under its parent company, Unilever.
Ross is still here.
This won't change what's in our freezers, Ross.
And in fact, Unilever, it's actually splitting off its ice cream business, isn't it?
It is.
It's been in the business for 25 years and you can't please all the people all the time.
It was criticised by shareholders two years ago for spending more time on messages than it was on making profits on mayonnaise.
Now it's been criticised for doing the opposite.
So it shows how difficult it is for companies to keep everyone happy.
There may be a potential if ice cream sales fall, but we'll see how that goes.
We will see.
Absolutely.
And it won't stop us from indulging Russ Willett.
All right, Russ Mould, thank you so much.
Investment Director at AJ Bell.
And that's it from World Business Express.
We'd love you to subscribe so you don't miss an episode.
You'll find us along with other Daily Edition World Business Report wherever you get your podcasts.
I'm Leanna Byrne.
Thanks for listening.
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