The data released this week signaled the possible start of a course correction for inflation that should keep the Federal Reserve on track to begin rate cuts later this year. The Fed will need to see more than one positive report on inflation before lowering rates, but we think upcoming data will pave the way for the central bank to lower rates in September. The new tariffs that will be imposed by the Biden administration on Chinese imports will have only a marginal impact on inflation and will not change our forecast for monetary policy.
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