00:00space. Well, you fed into my next question, because I do want to go to your market commentary from yesterday, where you said that 10 percent
00:09tariffs are likely to be inflationary. Can you talk a little bit more about now that we have the fuller tariff plan? What are your
00:19inflation expectations and how equipped is the U.S. consumer to handle something like this?
00:24Yes, without a shadow of a doubt, these tariffs are likely to push inflation higher. So prior to the announcement yesterday, our
00:34base case working assumption was that the end state will be an average tariff of around 10 percent. And based on our analysis, that
00:43was likely to add up to one percentage point to headline inflation. One percentage point doesn't sound like a lot, but from
00:52Federal Reserve's perspective, it is a very meaningful amount that actually could make all the difference between being able to
01:00cut rates and not. So with the announcements yesterday, the average tariff that we are calculating on the back of those
01:08announcements and taking into account the exemptions that were announced as well, is somewhere in the range of 15 percent. So
01:17clearly higher than the number that we were looking for. And we will see whether the end state tariffs after all the negotiation is
01:25finished trends towards that 10 percent level. But if we stay around the parameters that were set yesterday, clearly that upward pressure on
01:35inflation will be even greater than the one percentage point that we were expecting earlier, maybe one and a half percent, if not
01:44higher. So clearly we do believe that U.S. consumers will be feeling the pinch of dealing with higher priced items, higher priced goods, and
01:56that will translate itself into overall higher levels of inflation, something that we do not believe Federal Reserve can ignore.
