Tariffs and inflation

It is starting to look a lot like tariffs do affect US prices after all. The US PCE was published yesterday grew 2.6% YoY, higher than expected, and Core PCE climbed 2.8% YoY as well. But as you can see below, if we take the 6 month average, all measures are above 3%. The chart has been published in the WSJ by a journalist considered close to J Powell, to defend his stance of not lowering rates against pressure from Trump. It may not be a conventional measure, but it shows that inflation might be picking up, and the hawkish view might be justified. Powell is following his mandate to the dot, while the White House wants him to approach it on a more broader basis. There is still a lot of noise, with grace periods to several economies and tariff levels going up and down while negotiations take place, which makes it almost impossible to obtain a reliable trend, but even considering that noise, it does look like prices are being affected. There is no Fed meeting in August, but Central bankers meet at Jackson Hole, and although the theme this year is labor markets in transition, they will talk about inflation. For the Fed September meeting, Fed fund futures are discounting no rate cut.

Want to know more? You can find all our posts at https://www.myfundamental.net/insights

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning #policymistake #ratecut #stagflation