Tariff-Driven Inflation Needs More Time to Digest
According to senior analyst Stephen Douglass, inflationary pressures from tariffs have not yet fully unfolded and are expected to continue influencing the economy in the coming months.
Nevertheless, the overall economic environment remains supportive, which could allow the Fed to adopt a more accommodative stance at the appropriate time.
Inflation Slowdown Paves the Way for Rate Cuts
Douglass notes that as the impact of tariffs fully materializes, goods inflation could dip below zero in the second half of the year, creating room for monetary easing.
- The first half of the year is seen as critical for inflation adjustment
- The labor market is expected to stabilize without remaining overly tight
- A soft landing for the economy remains achievable
Fed Rate Cuts May Be Delayed
While markets broadly expect rate cuts to begin in mid-year, Douglass believes the more likely timing is later in the year, with cuts in September and December.
This assessment is based on a comprehensive view of gradually easing inflation and a stable economy, offering investors a new policy timeline.