Inflation Drivers

Inflation remains above target and is being driven by identifiable, but still unresolved, forces. Tariffs account for a significant share of core inflation and are taking longer than expected to pass through the economy. According to Powell, goods inflation has shifted from being flat or negative before tariffs to running around 2%, with tariffs contributing approximately 0.5 to 0.75 percentage points to the ongoing inflation overshoot.

Inflation has now run above target for five years, increasing concern as a new price shock from war has pushed oil prices higher. Powell acknowledged that the war against Iran has pushed up near-term inflation expectations. He also cautioned that the size and duration of oil’s impact on inflation is uncertain.

Powell expressed frustration with the stickiness of core non-housing services inflation. The labor market is no longer generating inflationary pressure yet services inflation has not declined accordingly.

The added uncertainty from war and oil reduces confidence in any forecasts. Powell acknowledged the lack of confidence behind them, noting that participants are effectively making estimates without strong conviction. He quipped that “you gotta write something down.” He even shared that someone on the FOMC joked that “This is one of those SEPs [Summary of Economic Projections], where if we were ever to skip an SEP, this would be a good one.”

Powell summarized the situation plainly: “the thing I really want to emphasize is that nobody knows.”

(Uncertain) Economic Backdrop

Still, Powell insisted that the broader economy remains resilient, with steady growth and stable unemployment. Longer-term inflation expectations remain anchored near 2%, which continues to provide an important foundation for policy.

The current SEP reflects low conviction and high uncertainty. Inflation’s trajectory will depend on how tariff effects resolve, how energy prices evolve, and whether services inflation begins to improve.

In the meantime, the Fed as a group still has core PCE (Personal Consumption Expenditure) inflation gliding comfortably to the Fed’s target of 2% by 2028 despite the recent updrift in the Fed’s preferred inflation gauge. Thus, the Fed remains confident in the path for the economy despite the lack of conviction in the forecasts.

The post Powell: Inflation Is Uncertain and the Forecasts Lack Conviction appeared first on Inflation Watch.

With so much dissension and disagreement in the Federal Open Market Committee (FOMC), the minutes of recent meetings have become more revealing. The minutes from the December Fed meeting shed more light on the character of those disagreements than Powell was willing or able to share at the press conference. During that press conference, Powell emphasized consensus amid uncertainty and portrayed disagreement within the Fed as a natural consequence of a multidimensional policy environment. Read alongside those remarks, the minutes reveal a more fractious narrative, one marked by deep and structural differences that are likely to shape monetary policy well into 2026. Powell framed disagreement as technical. The minutes suggest it is structural.

A Committee Without An Anchor

As a reminder, the FOMC members displayed striking dispersion with their votes. While the nine votes in favor of a 1/4 percentage rate cut were sufficient to carry the decision, the minutes indicated that a few of the yes votes came from FOMC members who “indicated that the decision was finely balanced or that they could have supported keeping the target range unchanged”. Two votes opposed the rate cut outright and wanted to leave rates unchanged. The third opposing vote wanted a 1/2 percentage point cut. Specifically, in favor were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Stephen I. Miran wanted the deeper cut. Austan D. Goolsbee and Jeffrey R. Schmid wanted no change.

Powell’s Consensus Narrative vs. the Reality in the Minutes

Powell framed the lack of unanimity as a question of risk-weighting rather than disagreement over fundamentals. “Everyone around the table agrees that inflation is too high and that we want it to come down,” he said, adding that officials also agree the labor market has softened. Where views diverge, Powell claimed, is “how do you weight those risks and what does your forecast look like,” describing the decision as a “close call” driven by the “complicated, unusual, difficult situation” tugging on the Fed’s dual mandates. Powell’s claim about inflation attitudes is particularly important given the Fed will likely spend a lot of time talking up its inflation-fighting credibility even as it cuts rates this year due to political and economic pressures.

The minutes suggest that the tension is forcing the Fed to confront a confluence of opposing economic views that resists clean consensus and raises the odds of persistent dissension. Importantly, a tension between inflation rhetoric and employment risk runs through the minutes.

Inflation: Confidence in Theory, Unease in Practice

Powell expressed confidence that inflation will continue to move lower over time. In aggregate, the minutes reflect that view. However, “a majority of participants remarked that overall inflation had been above target for some time and had not moved closer to the 2 percent objective over the past year”. The Fed’s staff reinforced these concerns by concluding that the upside risk to inflation has become more precarious given that inflation has remained above the Fed’s 2% target for four straight years. Still, some participants claimed that those upside risks have declined.

In a likely reference to the Fed’s Beige Book (which in 2025 was full of vivid descriptions of inflation pressures), the minutes reported that “some participants stated that their business contacts had reported persistent input cost pressures unrelated to tariffs”. Several of these participants in turn reported that “weaker demand limited the ability of some firms to raise prices or that business productivity gains might enable some firms to manage these cost pressures”. 

The minutes reported that “some participants highlighted the risk that elevated inflation might prove more persistent than expected”. These fears likely stem from the lingering and uncomfortable uncertainty about the ultimate impact of a fluid tariff regime. The minutes reported that a majority of participants expected disinflation in housing services to continue while a few participants also saw ongoing disinflation in core nonhousing services. As usual, this suggests the Fed finds plenty of comfort in the relatively tame long-term expectations for inflation based on survey and market data. As usual, these assessments suggest the Fed finds plenty of comfort in relatively tame long-term inflation expectations based on survey and market data.

If inflation will actually making a soft landing to the Fed’s 2% target in 2027 and 2028 as the current central tendency in the projections insists, the journey will likely continue to feature sticky inflation… and plenty of jawboning to convince financial markets the Fed will not allow tariffs, for example, to cascade into persistently high inflation. According to the minutes, “some participants noted concerns that a more prolonged period of above-target inflation could risk an increase in longer-run expectations”. Four years already seems like a prolonged period, so I am not convinced that a few more years above 2% will dissuade the Fed from continuing to cut rates to try to address weakness in the labor market.

Taken together, the minutes show a Fed that is far more concerned about labor-market fragility than its public messaging suggests. By incorporating that calculus, the bar for another rate cut looks lower than current market pricing implies”.

Labor Markets: Where the Fed’s Anxiety Really Shows

The FOMC sounded more unified about the employment picture. As a result, I expect in due time the Fed will give sway to cutting rates again sooner than later, as soon as January. According to the CME’s FedWatch tool, the current odds for a rate cut sit at a paltry 15% for the January 28th meeting, so I realize my perspective is an outlier. However, in a coming year that should deliver its share of outlier events, I think a January rate cut will be the least of the economic and financial surprises.

In December’s press conference, Powell acknowledged labor market softening. Powell said the Committee agreed that “the labor market has softened” and emphasized that employment faced “further risk”. However, he downplayed the urgency of the perceived deterioration. By contrast, the minutes uncovered some deeper anxieties about the employment picture and now give me further reason to believe in the high possibility for a January rate cut. For example, the minutes reported that several participants presented a case of potential signals of “greater fragility in the labor market”.

Why I am Expecting a January Rate Cut

The minutes reported that “participants generally assessed that, under appropriate monetary policy, the labor market likely would stabilize next year.” This conditional framing supports my expectation for more rate cuts than the market currently assumes. Notably, the central tendency of the Fed’s projections pegs 2025 as the peak year for unemployment. Any negative divergence from that assumption would strengthen the case for additional rate cuts.

Conclusion

The Fed as a group positions its statements for downside risks to employment and upside risks to inflation. However, the balance of its attention suggests the Fed is prepared to act as though inflation is well under control and employment is the more fragile component of the economic picture. I assume the stock market’s complete comfort with the current tensions comes from an abiding belief in the lower trajectory for interest rates. The market has already been gifted three rate cuts with the indices at or near all-time highs. The central tendency for rates in 2026 is 2.9% to 3.6%. The non-zero possibility that the Fed does not cut rates at all this year looks to me like window dressing meant to preserve the Fed’s inflation-fighting credibility.

I am betting on rate cuts to continue in January and an still positioned in the Goldman Sachs Access Inflation Protected USD Bond ETF (GTIP) as a main hedge against the stagflationary potential for more rate cuts in the face of sticky inflation. GTIP currently yields 4.2% and gained 1.9% in 2025. GTIP is down about 17% from its 2021 all-time high.

Be careful out there!

Full disclosure: long GTIP

The post Lessons from the Fed Minutes: Why Division and Dissension Are Likely to Dominate Monetary Policy in 2026 appeared first on Inflation Watch.

Still, after the dust settles on this meeting, I fully expect the Fed to stay the course with a rate cut in December. Powell’s statements belie a Fed that is both gradually (some reluctantly?) accepting the case for looking through inflationary pressures and getting incrementally more worried about the labor market.

Division Translates Into Balking

Powell acknowledged strong disagreements among the Committee members. He teased a reveal in the upcoming minutes from the meeting, but the Fed vote says plenty. Recent appointee Stephen Miran unsurprisingly wanted a 50 basis point cut in a repeat of his dissent in the September meeting. Kansas City Fed governor Jeffrey R. Schmid delivered a dissent at the other end with a vote for leaving rates unchanged. Thus, it is easy to imagine the Fed currently holds a broad enough range of opinions on the direction for monetary policy to cause a pause in December.

In response to a reporter’s question about division in the Fed, Powell pointed out that Committee members have different forecasts and different levels of risk tolerances which come through in their speeches. Most importantly, Powell revealed that “there is a feeling in some we should wait.” Since there was just one vote for waiting during the latest meeting, I assume Powell referred to waiting instead of cutting in December – a not so subtle hint that the Fed as a group may already prefer not to cut in December.

The Case for A December Cut Still Looms

However, the hesitancy to cut in December directly contradicts Powell’s assessment of the economic situation. Powell noted that the current rate is above the neutral rate (“wherever it is”). Thus, policy is technically restrictive. Importantly, Powell ascribed the cooling in the labor market and the economy to restrictive policy. So if the Fed has truly adopted the mission to focus on addressing the downside risks in the economy, the Fed must stay biased to cut rates. At this point, the Fed will have a very difficult time explaining how it can “stand by” and watch a weakening economy and labor market.

While there remains upside risk to the Fed’s inflation mandate, Powell makes a weaker and weaker case every meeting that the Fed is truly concerned about that risk. He said plenty to indicate that the prospects for inflation are contained and even tame. Here were his main points on inflation:

• Most measures of long-run inflation expectations remain consistent with the Fed’s 2% inflation target.
• Services inflation is coming down
• Higher tariffs are pushing up inflation as one-time increase in the price level (the base case)
• The core PCE (personal consumption expenditures, the Fed’s preferred measure of inflation) without tariffs would be 2.3% or 2.4% without tariffs, not far from the 2% target.
• The tariff-driven increase in goods prices is happening within the longer-term context of goods deflation.

Thus, once the base case of a one-time effect laps the inflation readings, the Fed should be comfortably close to its target.

While Powell reiterated that the Fed is determined to make sure that the inflationary impact of tariffs is indeed a one-time increase in the price level, the overall picture painted by Powell makes inflation look well-contained. The implied upside risk from the uncertainties in tariff policy hardly seem noteworthy in Powell’s updated narrative.

On the other hand, Powell claims there is “no significant deterioration” in the economic data. While Powell pointed out that the downside risks to employment have risen, he did not express any concern for the highly publicized mass layoffs from big companies like Amazon.com (AMZN) and United Parcel Services (UPS). In response to a question about these layoffs, Powell only said that the Fed is watching these developments, and the layoffs do not yet show up in the initial claims data (of course not – these layoffs are recent announcements).

Overall, Powell sums up the labor issue as low hiring and low firing in the context of immigration policies shrinking the labor supply and a cyclical drop in the participation rate in the workforce. When asked how then will rate cuts help the job market, Powell responded that cuts will make sure the “labor market doesn’t get worse.” Upon hearing that explanation, I felt tingles of recessionary risks.

Inflation Warnings from Overseas?

While Americans are mostly focused on the inflation risks from tariffs, inflation is also proving stubbornly sticky in other major economies who are not at war with the global economy. For example, with inflation at 3.8% in the United Kingdom, the Bank of England is further away from its 2% inflation target than the Federal Reserve is from its target. In its last letter explaining the on-going inability to hit the target, the BoE reported:

“The recent increase in CPI inflation has owed largely to food prices and administered prices, including water bills and Vehicle Excise Duty. A reduction in total labour cost growth also appears to have been delayed by the increase in employer National Insurance Contributions (NICs) and pay growth in sectors with a large share of employees at or close to the National Living Wage (NLW).”

Yet, the BoE expects this year’s inflation increase to peak in September. The combination of a weakening labor market and restrictive policy is expected to help push inflation toward the 2% target next year. This is the UK version of hopeful monetary policy. The BoE just made its last rate cut in August, going from 4.25% to 4.0%. The policy rate was left unchanged in the last meeting.

Earlier this week, inflation in Australia hit its highest point in over a year. With inflation now above the Reserve Bank of Australia’s target band of 2-3%, the RBA will likely need to put a pause on its easing cycle. The Australian Bureau of Statistics identified housing, recreation and culture, and transport as the main drivers of inflationary pressures. A likely pause in easing further strengthened my case to stay long the Australian dollar (FXA).

I am now on heightened alert for sticky inflation becoming a global problem that justifies an extended run for the debasement trade.

A Pause in the Debasement Trade

As the Fed expresses hesitancy about cutting rates again in December, the debasement trade took a major pause going into the Fed meeting, perhaps in anticipation of a less dovish Fed. Given I think the Fed will feel compelled to proceed with cuts in December, I consider the pause in the debasement trade to be even more temporary than the inflationary pressure from tariffs. I have treated this sharp pullback as the buying opportunity I have (mostly) patiently waited for. When parabolic rallies finally lose steam, the pullbacks are often swift and steep. I am looking for support to hold for the SPDR Gold Shares (GLD) by the $350 level where the 50-day moving average (DMA) (the red line in the chart below) awaits testing.

Bond yields understandably spiked higher in response to the Fed’s balk on rate cuts. However, I am no longer interested in trying to fade rallies in the iShares 20+ Year Treasury Bond ETF as I now accept that the bond market’s overall trajectory is to worry much more about imminent economic weakness than lingering inflationary pressures.

The bond market is giving the Fed a green light for rate cuts. Thus, today’s balking should gradually transition to acceptance in the coming weeks.

Be careful out there!

Full disclosure: short GLD put, long GLD calendar call spread, long UPS, long AMZN put spread

The post Powell Balks At the Next Step of Hopeful Monetary Policy appeared first on Inflation Watch.

In his speech at the annual Jackson Hole confab, Powell acknowledged that “with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance” (emphasis mine). In normal times, with this ever so slight tweak in Powell’s inclinations and probabilities coming at the end of a long explanation of the balance of risks to inflation, employment, and the economy, this concession could be interpreted as another tease in the on-going suspense and fight over rate cuts. Instead, a stock market ever more eager for rate cuts built a temple from a single stair step and responded with one of the biggest expansions in market breadth that I have ever seen.

Maintaining high odds of a September rate cut will effectively force the Fed to cut. However, if Powell stays on message – “monetary policy is not on a preset course” – then the September rate cut could easily lead to a major disappointment. The Fed’s voting majority may not be ready to promise a sustained rate cutting cycle because inflation remains a nagging problem for the Fed.

Even before the tariff drama, trauma, and noise, inflation was proving itself sticky and stubborn. Now, core CPI (Consumer Price Index) and core PCE (Personal Consumption Expenditures), the Fed’s preferred inflation measure, look like they have bottomed. Core CPI has even started heading upward largely thanks to a lift in services inflation. As a result, not only is the Fed looking to cut rates well short of its 2% (core PCE) target but also just as inflation’s downtrend is taking an extended pause.

Source: U.S. Bureau of Economic Analysis, Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index) [PCEPILFE], retrieved from FRED; U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: All Items Less Food and Energy in U.S. City Average [CPILFESL], retrieved from FRED, Federal Reserve Bank of St. Louis, August 25, 2025.

A suddenly very hot Producer Price Index (PPI) from July promises that subsequent CPI reads will not deliver inflation relief.

Moreover, tariff-driven inflation is already showing up both in the anecdotes from business leaders, earnings reports, and the Fed’s own research. Moreover, even though the Fed Funds rate is still in restrictive territory, financial conditions are not tight. In fact, financial conditions were last this loose right before the Fed belatedly started hiking rates in early 2022.

All together, these stories provide cautionary tales for rate cuts. The confidence I observe in the “rate-cutters” shows insufficient deference to the stagflationary possibilities in the economy. Powell characterized the potential as “a challenging situation” after he finished explaining how “in the near term, risks to inflation are tilted to the upside, and risks to employment to the downside”. This position between a rock and a hard place motivates me to tighten my grip on my position in Goldman Sachs Access Inflation Protected USD Bond ETF (GTIP).

A Swirl Of Claims and Counterclaims

At this point, every one has an opinion on what the Fed needs to do. I have taken note of some key interviews and speeches to portray the painful complexity of the task ahead for the Federal Reserve. Anyone who claims with confidence that the Fed should do “X” is glossing over some part of this picture.

Cleveland President Beth Hammack Leans Against A Rate Cut

Interviews like the one with Cleveland President Beth Hammack formed part of the reason the stock market got caught leaning away from Powell’s first step on the stairs of hopeful monetary policy. A day before Powell’s speech, Hammack insisted that “with the data in hand right now, if the meeting was tomorrow, I would not see a case for reducing interest rates”. She warned that her “biggest concern is that inflation has been too high for the past 4 years. And right now it has been trending in the wrong direction [see chart above]. It’s important we stay modestly restrictive to make sure inflation is brought back under control” (Hammack’s predecessor expressed similar concerns earlier in the month).

Hammack also worried that the inflationary impact of tariffs are just getting started and will continue into Q1 and Q2 of next year given the timing of contract renewals. These worries did not sound like the setup for an incrementally conciliatory Powell.

Hammack also stated that “financial conditions are broadly supportive of the economy” (consistent with the ANFCI). Moreover, she is “not hearing interest rates are a huge problem”. The builders and businesses building new plants in Hammack’s district are complaining just as much about the cost of materials and labor as they are about high interest rates. In a case for future inflationary pressures, manufacturers in the Cleveland district have been buffering price increases but cannot not sustain the hits “forever”.

I surmise Hammack will vote against a rate hike in September. Will she suddenly find herself on the dissenting side of the ledger?

Former St. Louis Fed President Jim Bullard Bolsters Candidacy As Next Fed Chair

Candidates for position of the next Fed Chair share a common trait. They think tariffs will not cause lasting inflation and support cutting rates right away. Former St. Louis Fed President Jim Bullard is a recent add to the candidate list. In a CNBC interview on August 12, Bullard insisted tariffs do not cause inflation. Tariffs are a tax and taxes do not cause inflation (a common equivalence). He pointed to data showing very muted effects and claimed that tariffs are not interrupting the longer-term trend to 2% inflation. Like other supporters of rate cuts, Bullard is looking well beyond the current swirl of data and glancing at the top of the stairs of hopeful monetary policy.

Council of Economic Advisers Chair Stephen Miran Asks “What Inflation”?

Council of Economic Advisers Chair Stephen Miran is also on the list of potential candidates to next head the Fed. Miran appeared on CNBC the same day as Bullard to discuss the economy. By narrowing his view to inflation since inauguration, Miran calculated a 1.9% annualized rate of inflation (I assume this was a reference to headline inflation). He further insisted that there “continues to be no evidence whatsoever of tariff-induced inflation”, and he implied that there will be no evidence for future impacts either. Ultimately, exporters will bear the cost of tariffs because they are the least flexible part of the supply chain; Americans will just buy elsewhere or make formerly imported goods domestically (do exporting countries doing deals understand their ultimate doom?).

When asked about the bottoming in core inflation, Miran dismissed the dynamic because tariffs are not the culprit. Miran pointed to used cars and airfares as core drivers. He went on to finger illegal immigration for boosting rents by 4-5%. Thus, net services inflation will go to zero because of the current crackdown on illegal residency.

Miran stands confidently at the top of the stairs of hopeful monetary policy. I am guessing he is a front-runner in the race for Fed Chair.

Gold Paralyzed With Indecision?

The price of gold has largely stopped responding to the back and forth in inflation-related data and opinions on monetary policy. While the SPDR Gold Trust (GLD) increased 1.1% in the wake of Powell’s first step on the stairs of hopeful monetary policy, GLD remains firmly stuck in a 4-month trading range. A technical “bearish engulfing” pattern in April continues to loom over the trading action as a top. Still, I am betting on GLD responding bullishly to the next rate cut just as it did to the last one. GLD is up 30% after initially selling off in response to what was thought to be a hawkish rate cut at the time.

I have been holding a GLD calendar call spread for the last half or so of this trading range while rolling forward the expiring short ends of the spread. I plan to convert this position to an outright call spread ahead of the September Fed meeting.

Be careful out there!

The post Powell Places His First Step On the Stairs Of Hopeful Monetary Policy appeared first on Inflation Watch.

In his latest press conference on monetary policy, Federal Reserve Chair Jerome Powell reaffirmed the central bank’s dominant message: tariff-driven inflation must not evolve into persistent price pressure. The Fed must ensure tariffs result in no more than a one-time price shock, as has so often been advertised. The Fed is maintaining a restrictive policy stance, “modest” in Powell’s opinion, not to suppress growth unnecessarily, but to guard against the risk that a one-time shock becomes embedded in inflation expectations.

Powell described a uniquely difficult moment for the Fed and monetary policy. “This is a special situation with risks to both of the goals,” he said, referring to the Fed’s dual mandate of maximum employment (currently met) and price stability (inflation remains above target). The policy response: stay in position, gather more data, and avoid premature action. “We see our current policy stance as appropriate to guard against inflation risks,” as Powell stated in his prepared remarks.

These stances form “Powell’s promises.”

Tariff Inflation: Short-Lived or Sticky?

During the press conference, Powell made clear that the central bank does not see inflation from tariffs as systemic, but it must remain vigilant. “Higher tariffs have begun to show through more clearly to prices of some goods,” he acknowledged. While the base case remains a one-time price level shift, Powell acknowledged, “it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed.”

That task—managing a potentially durable inflationary impulse from trade policy—is Powell’s focus, along with the majority of the Fed. The Fed is collecting evidence as companies pass costs to consumers, raising the risk that inflation expectations begin to drift. “Near-term measures of inflation expectations have moved up… on news about tariffs,” Powell noted, though longer-term expectations remain anchored for now.

In the press conference Q&A, Powell was more direct:

“A pretty reasonable base case is that this is a one-time price increase. We will make sure that’s the case.”

Policy Outlook: Restrictive, Yet Watchful

In support of its goals, the Federal Open Market Committee (FOMC) left the federal funds rate unchanged at 4¼ to 4½ percent, and continued its balance sheet reduction plans. Powell emphasized that this positioning is intended to give the Fed space to observe, not react hastily, a message consistent with past meetings:

“For the time being, we are well positioned to learn more about the likely course of the economy and the evolving balance of risks before adjusting our policy stance.”

Although the Committee’s policy rate remains in “modestly restrictive” territory, Powell flagged a disconnect by observing that “financial conditions are accommodative.” In other words, the economy is not acting as if monetary policy is holding the economy back. (I wish Powell spent more time unpacking this apparent paradox). When a reporter pointed out weakness in the housing market, Powell reminded the audience that the Fed looks at the economy’s performance as a whole, in its totality. However, his claim that the Fed cannot impact housing supply is only partially true. High loan costs can undermine the economics of some housing projects. These loan costs usually follow the Fed funds rate.

A Measured Mandate: No Rush to Cut

Despite the slowing of inflation from its mid-2022 peak, Powell emphasized that it “remains somewhat elevated.” Core PCE inflation rose 2.7 percent over the 12 months ending in June—nearly unchanged since the start of the year. While services inflation continues to ease, goods prices are rising under tariff pressure, motivating the majority of the Fed to hold rates steady.

In response to dissenting votes from two members (Bowman and Waller, who preferred a rate cut), Powell praised the clarity of the debate:

“What you hope is that people explain their positions clearly and that’s what we had. We had one of our better meetings…This was a good meeting today.”

Powell offered high praise for this meeting—likely an effort to stave off media speculation about Fed acrimony or debilitating disagreements. Powell emphasized that “the majority of the committee is of the view inflation is above target and employment at target, so policy should be more restrictive.” He reiterated this simple formula to make the case plain. He deferred to the dissenters to make their cases in coming days.

To further underscore the majority’s case, Powell suggested that the Fed is already “looking through” goods inflation simply by not raising rates. I am sure that commentary raised at least a few eyebrows given how hawkish it sounds at a time when everyone is looking for the date rate cuts resume. Ultimately, Powell insisted that tariffs “will not turn into inflation, as we will make sure it won’t.” He also cautioned that the Fed must act “efficiently”. If the Fed cuts too soon, a resurgence of inflation would sent the Fed scrambling to raise rates again (a scenario that does not concern dissenter Waller). If the Fed waits too long, then it will allow unnecessary damage to the labor market (this is the scenario that concerns Waller most).

The Renovation Sideshow

The press of course had a questions about the tensions with President Trump and a gathering cacophony of his administration. Powell, as always, was quite dignified in his responses. However, his description of Trump’s recent (and awkward) visit the suddenly controversial renovations contained some backhanded commentary. Powell called the visit a good one, an honor. He added that it is not often a President comes by the Fed for a visit, especially to see a building. In other words, not only was Trump’s visit unusual, but also it was a bit comical. I wish the occasion allowed Powell to smile and crack more direct jokes.

A week and a half ago, the Federal Reserve posted a short video explaining the renovations. A lot of the work involves upgrades to meet government safety and security standards (like blast proof windows) and to preserve historic features. Who knew such work could create such a stir and build a case for firing a Fed Chair?

Conclusion: One Shot at Containing Price Pressure

Powell’s framing of the Fed’s challenge is both strategic and cautionary. Tariff inflation must remain a one-time shock, not a repeat offense. At the same time, the Fed cannot overlook the labor market’s fragility.

“Our obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem.”

With risks pressing on both sides of the mandate, the Fed’s current posture is one of active restraint—willing to move, but unwilling to guess.

The post Powell’s Promises: Containing Tariff-Driven Inflation and Risks to Dual Mandate appeared first on Inflation Watch.

Each Fed region told slightly different stories about their respective inflationary pressures. A few regions are even enjoying some type of price stability for now. Still, the anecdotal evidence on the whole supports the notion that tariffs cause prices to rise and the price impacts can cascade in uncertain ways.

Boston

Boston produced benign inflation commentary. Prices may be stabilizing. According to the Boston observers: “Most contacts expected to hold their own prices steady for the rest of the year, as some perceived strong consumer resistance to further price increases. Tariffs were expected to drive seafood prices higher going forward, but risks of rising inflation were mentioned less frequently than in the previous report.”

New York

The commentary from New York was the exact opposite of Boston. Perhaps reflecting a higher rate of international commerce in the New York region, this region delivered some of the sharpest inflationary commentary: “the pace of input price increases remained steep as tariff-related cost increases were widespread. Many businesses reported continuing to pass on some or all tariff cost increases to their customers.” Tariffs drove up the costs of steel inputs and auto parts. While businesses indicated there are limits to their ability to pass on prices – “businesses expected substantial increases in input prices in the months ahead, but more moderate increases in selling prices” – one retailer reported a creative solution by raising prices on products with inelastic demand. This pricing strategy could gain popularity as tariffs push higher prices across the economy and businesses scramble to accommodate without crushing demand.

Philadelphia

This region reported some pricing pressures in the forms of discounts from the retail, tourism, and residential construction sectors. The pricing pressures facing builders have slowly increased this year. One firm even received price relief on insurance for the first time in a few years. While tariff-related pricing pressures have been lower than expected so far, businesses expect larger tariff impacts in coming months.

Cleveland

Perhaps because of heavy industries with a dependence on highly tariffed inputs, Cleveland seems to be getting hit hard by cost pressures: “contacts’ reports indicated that nonlabor input costs continued to rise at a robust pace in recent weeks and that the cost stabilization seen during 2024 had dissipated.” The strong pace of price increases in imported, tariff-impacted materials and tariff-impacted retailers leads contacts to generally expect “costs to grow at a strong pace in the coming months.” The banking, professional, and business services sectors have even experienced higher costs for technology, including AI and data security. (Cleveland was the only region to report such higher costs, but I doubt they are or will be the only one hit given the broad need for this technology). Firms in Cleveland are raising prices to respond to tariffs, but they are somewhat constrained by price sensitivity in their marketplaces.

Richmond

Richmond had little to say about prices. The most notable comment came from a firm that has suffered increased costs throughout its business: “One manufacturer said that input costs were higher in recent months due in part to tariffs but also from rising regulatory, insurance, and labor costs, including wages and benefits.”

Atlanta

In Atlanta, businesses are trying every trick in the book to manage tariff-related risks and price pressures: sharing costs between suppliers and customers, changing supply chains, drawing down on pre-tariff inventories, pre-emptive price hikes, and wait-and-see. I expect this broad palette of strategies to unfold nationwide.

Chicago

Business in Chicago expected the same pace of inflation going forward as the “moderate” rate they saw from late May to June. Higher material costs were the highlight for manufacturers surveyed in the region.

St. Louis

Businesses surveyed in St. Louis described a mix of absorbing the increased costs of tariffs and passing along higher costs to customers.

Minneapolis

Beating Boston, Minneapolis had the most benign commentary on inflation. Businesses in Minneapolis actually reported a slower pace of inflation than the previous month. This region quantified its survey as follows:

• About a quarter of District firms increased the prices they charged to customers in June from a month earlier.
• About the same percentage anticipated increasing their prices in the month ahead.
• Slightly less than half of respondents reported increased input prices over the previous month.

Kansas City

Profit margins shrank in Kansas City as businesses were not able to pass on the full extent of increased input costs. Companies may have absorbed all they can at this point given “some firms reported they are planning broad-based price increases across product lines to maintain profitability.”

Dallas

Despite a range of reports of higher costs for input materials, “expectations for 12-month price growth eased slightly in June compared to March.”

San Francisco

Inflationary pressures remained the same from the June to the July Beige Book. The pressures are also broad-based: “Price increases were reported across a wide range of industries.”

Inflation Will Stay Resilient

On balance, the Beige Book confirms that, at best, inflation going forward will hang around current levels. Gone is the glide path downward that reassured the Fed about cutting rates. The June CPI report suggests that inflation has bottomed out. A nudge from tariffs could put in place a new uptrend as higher price levels settle out through the country.

The Fed is unlikely to hit its 2% inflation target anytime soon.

The Noise

While inflationary pressures build, pressures build on Chair Jerome Powell o resign or get fired. The drumbeat of acrimony now seems like a lot of noise. Like the tariff drama, trauma, and noise, the Powell versus Trump drama is mainly headline fodder until something happens. Wednesday’s (July 16) news was case in point. Headlines screamed Trump was ready to fire Powell, bonds fell, and then Trump refuted the rumor. The iShares 20+ Year Treasury Bond ETF (TLT) almost tested its low for the year before rebounding sharply.

I used the sharp dip to buy TLT $87 call options expiring in August. The trade bets on another relief rally following a sharp sell-off. I expect to return to fading rallies in due time.

Be careful out there!

Full disclosure: long TLT calls

The post July Beige Book Reinforces A Bottoming in CPI appeared first on Inflation Watch.

Waller’s Case: Tariff-Driven Inflation Is Transitory

Just two days after Federal Reserve Chair Jerome Powell insisted that meaningful inflation is coming, Fed Governor Christopher J. Waller shared a nearly polar opposite narrative. Of course, given Waller may be on the short list of the President’s next pick to head the Federal Reserve, he has a built-in motivation to speak with authority in support of the administration’s claims that tariffs are not a threat to inflation. During a CNBC interview, Waller made the case for transitory and immaterial inflationary impacts from tariffs that would allow the Fed to start cutting rates as early as the July meeting. Waller explained that the Fed had paused for six months fearing inflationary impacts from tariffs that have yet to materialize. He chose to look through the ongoing uncertainty on tariff levels, timing, and frequency of change, as well as the recent Beige Book, which was full of accounts of businesses preparing for or already responding to tariff risks. Moreover, Waller claimed that only about 10% of the price index comes from imports (which made me wonder why there is any fuss over tariffs!). Instead, Waller expressed greater concern about the potential economic weakness caused by tariffs and stated he does not want to wait to cut until “we see a crash.”

Waller also referred to a speech he gave in South Korea in early June that laid out the detailed economic case for looking through tariffs as a one-time price shock. In “The Effects of Tariffs on the Three I’s: Inflation, Inflation Persistence, and Inflation Expectations,” Waller concluded that “the economics behind a tariff increase implies it should have a transitory effect on prices—tariffs raise prices once, but those prices don’t keep going up.” This conclusion holds if tariffs are hiked all at once in a one-and-done fashion. Otherwise, this reassurance reinforces the same argument Treasury Secretary Bessent made at the beginning of the tariff drama, trauma, and noise. Assuming that long-term inflation expectations remain anchored (as they are in market-based measures and professional forecasters, not in consumer-level surveys), Waller concluded “the tariff-induced inflation will be transitory and [the Fed] should look through it when setting policy.”

Powell’s Caution: Don’t Rush the Cuts

When Powell appeared on June 24th in front of the House committee to deliver the semiannual monetary policy report before the House Financial Services Committee, he was, of course, peppered with questions about tariffs and inflation. At one juncture, Powell took the opportunity to agree with Waller with an important condition (emphasis mine): “I do agree that basically if things are a one-time increase, then you don’t respond to them. That’s the whole idea if there’s a shock to prices… generally speaking you don’t respond if you are highly confident that it will just be a one-time shock.” Powell went on to caution that this particular situation is “a complicated one,” and said the Fed must make this decision about the timing of rate cuts “with some care.” He added that the Fed has not yet reached a point of price stability, and these large tariffs “raise kind of more concern” given the economy is just a few years out from a highly inflationary environment.

Powell’s caution appears warranted. Attempts to pattern-match to past history are challenging because of the scale and magnitude of the potential tariffs. The volatile implementation of economic policy means the Fed cannot be sure that tariff hikes will be a one-time episode. So, while a coming price shock may move inflation away from target, there remains some uncertainty about whether the Fed will be able to watch inflation settle back to target.

Bowman and Daly Lend Conditional Support

Vice Chair for Supervision Michelle W. Bowman added commentary on monetary policy in a speech the day before Powell’s testimony: “Assessing the Effectiveness of Monetary Policy During and After the COVID-19 Pandemic,” at a research conference sponsored by the International Journal of Central Banking and the Czech National Bank in Prague, Czech Republic. Bowman positioned herself as supportive of imminent rate cuts, although she did not specifically target July. Instead, she outlined broad conditions supportive of rate cuts: “If inflation remains near its current level or continues to move closer to our target, or if the data show signs of weakening in labor market conditions, it would be appropriate to consider lowering the policy rate, moving it closer to a neutral setting.” Bowman shared Waller’s concerns for the economy and stated that inflation appears on a sustained downward path to the 2% target:

“As we think about the path forward, it is time to consider adjusting the policy rate… we should recognize that inflation appears to be on a sustained path toward 2 percent and that there will likely be only minimal impacts on overall core PCE inflation from changes to trade policy. We should also recognize that downside risks to our employment mandate could soon become more salient, given recent softness in spending and signs of fragility in the labor market.”

Bowman expressed reassurance in the lack of inflationary impact from tariffs to date: “It appears that any upward pressure from higher tariffs on goods prices is being offset by other factors and that the underlying trend in core PCE inflation is moving much closer to our 2 percent target than is currently apparent in the data.” While acknowledging some upside risks for inflation, Bowman emphasized that she is “not yet seeing a major concern, as some retailers seem unwilling to raise prices for essentials due to high price sensitivity among low-income consumers and as supply chains appear to be largely unaffected so far.”

On Bloomberg Surveillance, June 26, Federal Reserve Bank of San Francisco President Mary Daly capped the dovish commentary by leaning toward the third of three timing scenarios for inflation:

1. Delayed, tariffs will have some impact and will be more persistent.
2. Delayed but will be one-off.
3. Does not deliver the punch history suggests will come as businesses absorb costs.

Daly stated that her “modal expectation” had been for some time that the Fed would be ready to cut rates in the fall. Thus her current dovishness is consistent with prior stances. Daly acknowledged tariffs “will potentially raise inflation.” However, since the impact should dissipate over time, it should not build into inflation expectations.

Rate Cuts, Politics, and the Fed’s Legacy

As the Fed’s debate about the impact of tariffs on inflation plays out, I am reminded that there is a larger context that influences how the Fed positions itself. The Federal Reserve was slow to respond to inflation in the throes of the pandemic, assuming that the price shock would be “transitory.” Even though he brought back the term “transitory,” even Waller revealed, “I am willing to admit that, at the time, I underappreciated how the large and sustained fiscal response would combine with highly accommodative monetary policy to overstimulate aggregate demand in an economy that quickly recovered from the early effects of the pandemic.” Waller is full steam ahead on team transitory again, while Powell continues to act like someone who still feels the scars. Powell’s caution makes even more sense in this context.

While Powell insists he is ignoring the political noise about his competence, his unwillingness to follow Presidential orders, and public ruminations about his firing or the looming presence of a shadow Fed Chair, Powell’s adamant stance sure has the appearance of someone trying to prove a point of toughness and independence. Thus, I fully expect Powell to be the “last one” to reluctantly move forward with rate cuts. I even expect his messaging at the time of the first rate cut to place responsibility squarely on the broader Fed… and to include some residual hawkishness of his own.

Overall, I lean toward Powell’s caution for all the reasons he gave to Congress. The environment remains highly uncertain, and the Fed has not yet reached its price target, even as a large price shock looms. Cutting rates in the midst of this swirling dynamic would signal a high degree of confidence in the post-shock equilibrium. Moreover, the Fed may have fundamentally different reads on the economy. For example, Daly insisted that “there are no warning signs that the economy is weakening, although progressing more slowly than before.” So if the Fed is both hampered by lower-quality data (due to federal budget cuts) and divided on the economy’s health, proceeding with rate cuts sooner rather than later seems doubly risky.

Conclusion

I will be highly surprised by a July price cut. Indeed, the CME FedWatch tool shows just a 21% chance of a cut, while September’s meeting has a 96% chance. These high odds essentially lock the Fed into cutting rates at the September meeting in order to avoid shocking the market. The messaging around that rate cut will be critical. Moreover, will the bond market get spooked and send long-term rates higher, just as it did both times the Fed cut rates last year?

The volatility index (VIX) sure looks incredibly low given the potential fireworks ahead. After breaking support from the dawn of the tariff drama, trauma, and noise, the VIX started this week right on top of that line.

Be careful out there!

Full disclosure: no positions

The post Powell vs. Waller: Divided Fed Faces Tariff-Driven Inflation Uncertainty appeared first on Inflation Watch.

As before, Powell laid the blame for stagflationary impacts on tariffs: “increases in tariffs this year are likely to push up prices and weigh on economic activity.” In a likely reference to a Beige book full of tariff-driven warnings on inflation, Powell also observed the following:

“…we’re beginning to see some [tariff-driven inflationary] effects, and we do expect to see more of them over coming months. We do also see price increases in some of the relevant categories…that are attributable to tariff increases. In addition we look at surveys of businesses…many companies do expect to to put all or or some or all of the effective tariffs through to the next next person in the chain and ultimately to the consumer.”

These expectations for meaningful inflation keep the Fed sitting on its hands. The median expectation for the Federal Funds rate stayed the same for 2025 at 3.9% (the current range is 4.25 to 4.5%) but nudged higher for 2026 from 3.1% to 3.4%. Even 2027 nudged higher from 3.1% to 3.4%.

A Swipe at DOGE?

Powell’s implicit critique of Federal policies did not stop with economic policy this time around. In response to a question about the Federal Reserve’s plans to cut its workforce, Powell was curiously deliberate in explaining the “professional” way to rationalize a Federal workforce:

“This is something you do very carefully, thoughtfully, and you do it respecting that we have critical missions to carry out. I’ve had a lot of experience in my prior careers with headcount reductions and things like that, and this is how you do it professionally. You do it carefully, thoughtfully with a lot of planning, and you do it over a period of time.”

I took note of Powell’s commentary because the Department of Government Efficiency (DOGE) has made a name for itself with swift, sudden, and often deep cuts throughout the Federal government. Powell clearly plans to leave his Chairmanship swinging.

Muted Responses Include A Short-Term Bottom for the U.S. Dollar

While Powell was swinging, financial markets general yawned. The S&P 500 (SPY) did its typical post-Fed fade after erasing all of the morning’s gains. The net impact was a forgettable 0.03% loss on the day. The SPDR Gold Trust (GLD) fell 0.5% on the day as the U.S. dollar index (DXY) resumed its countertrend momentum since bottoming out at a fresh 3-year low and just below the April low. A major test is coming soon with resistance from the downtrending 50-day moving average (DMA) (the red line). I remain bearish on the U.S. dollar as long as that resistance holds.

Source: Tradingview.com

Be careful out there!

Full disclosure: long and short U.S. dollar currency pairs

The post Jerome Powell: Meaningful Inflation Is Coming appeared first on Inflation Watch.

Tariffs Create Inflation Risk

While the administration goes back and forth on whether tariffs will create price increases, Powell is quite clear: “If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation”. Powell further warned that these large tariffs will also likely lead to “a slowdown in economic growth, and an increase in unemployment”. This cocktail is the very definition of stagflation. Powell reinforced his implicit plea to end the tariff war by repeating his warnings during the Q&A session. For example, he emphasized that “given the scope and scale of the tariffs…certainly the risk to higher inflation, higher unemployment have increased.” As a result, the Fed “won’t see further progress toward our goals, but we might see a delay in that.”

To add credibility to the concerns, Powell referenced the consensus (emphasis mine): “If you look at where forecasters are, they’re all forecasting an increase in inflation.” Without admitting he fears the potential of a recession, Powell followed up by referencing “forecasts of weakening in the economy and some have recession forecast.”

Thus, if Powell was in charge of trade policy, he would not go down the current path of large tariff increases. The risks to inflation and of a weaker economy – aka stagflation – are too great.

These admonishments are made more remarkable given the on-going (and one-way) spat that President Trump has with Powell. Trump now calls the Fed Chair “too late Powell”. Trump piled on by calling Powell a fool after the latest stall on rate cuts. I suspect Trump sees the hidden messages in Powell’s commentary.

Waiting As Leverage

Given the standoff in risks, the Fed has no choice but to sit on the sidelines of policy. Firstly, the trade policies are uncertain and in flux. During the current 90-day pause, anything can happen, including a sudden collapse in the ceasefire or another 90-day pause to avoid all-out economic warfare. Once these uncertainties clear up, the Fed next must wait to see impact from the policies before it can venture to take action.

Yet, I think the Fed would be cutting rates if not for the tariff risks. During the Q&A, Powell let slip that the Fed could have been late in cutting rates last year: “I wouldn’t say that what we did last fall was at all preemptive. If anything, it was a little late.” Ironically, the tariff risks will definitely make the Fed late again. By the time the dust settles enough for the Fed to be confident in more rate cuts, the economy could be deep in the throes of weakness.

Still, there is an interesting angle in the Fed’s insistence on waiting. The U.S.’s massive budget deficits need to be financed at lower rates. This more favorable financing likely needs the assistance of the Fed, whether by coaxing the long-end of the bond market to come down with “follow the leader” federal fund rate cuts or something more direct like “Operation Twist.” The longer higher rates persist, the harder it will be for the U.S. to take major fiscal action like extending the massive tax cuts from 2017. Powell has insisted since the first pause on rate cuts that the Fed can afford to wait. In the latest meeting, Powell further emphasized the Fed can afford to wait. I counted 21 times Powell used the word “wait” or “await”, 3 times Powell referenced no need to “hurry”, and another 4 times Powell insisted on exercising patience. I see a Fed in stagflation planning mode when Powell insists “for the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”

The message to the White House? Provide clarity post haste. All this waiting is the Federal Reserve’s way of exercising leverage while disavowing interest in advising on policy.

Markets React: The Dollar, Gold, and Bond Yields

After the Federal Reserve’s statement, the U.S. dollar strengthened, gold weakened, and long-term bond yields went higher for the rest of the week.

The U.S. dollar index (DXY) is still rebounding off a 3-year low. So for now I am assuming that the dollar’s strength for the rest of the week was a residual from this bounce from “oversold conditions”. Currency traders are likely waiting for the next dramatic tariff headlines to resume selling the dollar. (I currently hold a mix of long and short dollar bets). The weekly chart below shows that at the peak of the tariff trauma and drama that the dollar index reached a level last seen in March, 2022.

Gold is even more intriguing. The SPDR Gold Trust (GLD) went on a near parabolic run for a week and a half in April. Such runs usually come to climactic ends. In GLD’s case, a bearish engulfing topping pattern signaled the end of the run. GLD attempted a rebound from support at its 20-day moving average (DMA) (the dotted line below), but it stopped cold right at its all-time high. Fed day brought GLD right back down to its 20DMA support. I suspect this support will eventually give way as the Fed’s latest insistence on patience translates into a slightly lower enthusiasm in buying gold as a hedge against a Fed forced to cut rates right into the teeth of tariff-driven inflationary pressures. Waning enthusiasm is likely only worth a test of uptrending 50DMA support (the red line).

Long-term rates have chopped around since December. However, based on the “heavy” technicals for iShares 20+ Year Treasury Bond ETF (TLT), rates look poised to head higher at some point. TLT is just one more bout of economic chaos away from a fresh swoosh downward. The lows of the year coincided with levels last seen in November, 2023.

Stuck Until Further Notice

By the time of the next Fed meeting in June, we should have a better idea about the success or lack thereof for the 90-day tariff pause. The pressure will only increase on Powell to speak clarity into monetary policy. If more economic and sentiment indicators are flagging increasing stagflationary pressures while trade policy remains uncertain, I expect Powell to get more strident in his warnings (in Powell’s mild-mannered way of course). In the meantime, the stock market looks poised to join the Federal Reserve in getting stuck. The S&P 500 (SPY) is in a cliffhanger trading right below 200DMA resistance for the month of May.

Be careful out there!

The post Powell’s (Not So) Hidden Plea to End the U.S.’s Tariff War appeared first on Inflation Watch.

Source: April 2025 Manufacturing Business Outlook Survey, Federal Reserve Bank Philadelphia

At the same time economic activity fell off a cliff, prices paid accelerated higher. A steady uptrend in prices paid was in place since last year, but in April they jumped to levels last seen in July, 2022. After spiking in January, the prices received flattened out. So the good news, for now, is that firms in aggregate are not passing along the surge in prices paid. Either firms are facing the reality of a loss in pricing power in a softening economic environment, and/or they are trying to wait out the current economic chaos. Either way, the underlying stagflationary pressures are roiling just under the surface for the manufacturing sector.

Note that since these measures are diffusion indices (see definition in the above chart), the magnitude of these effects is not visible. Still, given policymakers closely watch these economic surveys to inform policy, the stagflationary signals are sure to bleed out into monetary policy.

The Fed Trap

Based on the speeches from members of the Federal Reserve, the stagflationary signals are already bleeding into monetary policy. For example, concerns about stagflation appeared in Fed Chair Jerome Powell’s answers to questions in an interview at the Economic Club of Chicago last week.

“the administration…is implementing significant policy changes and particularly trade now is the focus and the effects of that are likely to move us away from our goals. So unemployment is likely to go up as the economy slows in all likelihood and inflation is likely to go up as tariffs find their way and some part of those tariffs come to be paid by the public. So that’s the strong likelihood…”

This economic bind has the Fed trapped between inflation and economic weakness. For now, all the Fed can do is hope for the best. Hope as monetary policy came through as Powell continued: “…my hope is that we’ll get through this and get back…we’ll be moving away from those goals [of maximum employment and price stability] probably for the balance of this year and then or at least not making any progress and then we’ll resume that progress as we can.”

The Fed is clearly not thinking about responding to the current economic chaos with price cuts. Powell insisted that “our role is to make sure that this will be a one-time increase in prices and not something that turns into an ongoing inflation process.” The Fed cannot contain higher prices and higher inflation expectations with rate cuts. Thus, the Fed will likely sit on its hands as long as possible in the face of weakening employment. I expect the Fed to resort to creative “Fedspeak” in lieu of action in the hopes stagflationary pressures will wind down on their own.

A GTIP Dip

Three weeks ago I made the case for buying the Goldman Sachs Access Inflation Protected USD Bond ETF (GTIP) as one way of meeting the investing challenge of a stagflationary environment. GTIP fell soon after that as long-term bond yields suddenly soared with waning confidence in the U.S. economy and the U.S. dollar. I used this period to accumulate GTIP at lower prices since I do not foresee long-term yields going much higher absent an extreme crisis of confidence. GTIP will get its next big test when April’s CPI rolls out next month. Will it demonstrate businesses restraining from passing along tariffs to end consumers? Will it warn of resurgent inflationary pressures? The Federal Reserve Bank of Philadelphia’s April 2025 Manufacturing Business Outlook Survey suggests GTIP has tailwinds.

The Goldman Sachs Access Inflation Protected USD Bond ETF (GTIP) briefly dropped toward the bottom of its recent range.

Be careful out there!

Full disclosure: long GTIP

The post An Early Look At Stagflationary Pressures appeared first on Inflation Watch.