Connect with us

Hi, what are you looking for?

Economy

Fed likely to overlook Trump’s tariff-driven inflationary impacts – Goldman Sachs

Investing.com– The Federal Reserve is expected to largely disregard any inflationary effects stemming from tariffs under Donald Trump’s administration, as such impacts are viewed as one-time price level increases rather than persistent inflationary pressures, Goldman Sachs analysts said in a research note.

However, analysts acknowledged concerns that tariffs could lead to higher inflation expectations, a development that might constrain the Fed’s policy flexibility. These expectations could become more sensitive given the recent surge in inflation, they said.

Goldman Sachs cited economic studies showing that individuals’ lifetime inflation experiences significantly shape their inflation expectations. Using data from the University of Michigan’s consumer sentiment survey, the analysts noted that recent inflation experiences, particularly in highly visible areas like gasoline prices, have an outsized impact on public sentiment.

Based on these findings, the analysts projected that tariffs, under their baseline scenario, would have minimal effects on inflation expectations. Even in a scenario involving a 10% universal tariff, one-year inflation expectations might rise by 0.5 percentage points, and five-year expectations by just 0.1 percentage points.

However, Goldman Sachs warned that tariffs could have a larger psychological impact if price increases garner significant media attention, akin to gasoline price spikes. Recent jumps in Michigan inflation expectations and frequent mentions of tariffs in survey responses suggest that such effects are plausible, analysts stated.

This heightened public sensitivity to tariff-driven price changes might influence policymakers. The Federal Open Market Committee (FOMC) could refrain from cutting rates under such circumstances, while the White House might face pressure to limit further tariff increases, the analysts concluded.

This post appeared first on investing.com

    Fill Out & Get More Relevant News


    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    You May Also Like

    Investing

    Newmont (NYSE: NEM) reported mixed financial results even as the price of gold approached its all-time high. In all, the company’s earnings per share...

    Investing

    Fisker (NYSE: FSR) stock price has been one of the best-performing electric vehicle (EV) stocks this week even as Tesla slumped. The shares jumped...

    Investing

    The Fox Corporation (NASDAQ: FOX) stock price has been under pressure as investors come to terms with the abrupt firing of Tucker Carlson. The...

    Investing

    NatWest (LON: NWG) share price rose sharply, helped by the strong results from Barclays. The stock jumped to a high of 274.8p, which was...




    Disclaimer: Oldamericanbroker.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the-company.


    Copyright © 2025 Oldamericanbroker.com