Stagflation Risk Keeps Uncertainty High For Fed's Upcoming Policy Decisions

2025-03-25 20:45:00 ET

Summary

• The Fed still appears to be struggling with deciding if inflation is a bigger risk than slower economic growth.
• TMC Research’s Fed funds model anticipates a moderate bias for a rate cut in the near future.
• A key source of uncertainty for monetary policy: how or if inflation changes due to Trump tariffs that are scheduled to take effect on Apr. 2.

By James Picerno

Signs of slower US economic growth continue to emerge, while inflation remains “sticky.” A degree of stagflation risk, in other words, remains a near-term challenge for policy decisions....

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