Is Stagflation Lite On Tap?

Summary

• The Fed left interest rates unchanged today as widely anticipated, noting uncertainty around the economic outlook has increased.
• Expected growth in 2025 was revised down from 2.1% to 1.7% - not a recession but weaker. And core PCE inflation was revised up from 2.5% to 2.8%.
• Markets seemed to take Powell’s notion of “transitory” tariff-driven inflation as a dovish outcome.

Torsten Asmus

The Fed left interest rates unchanged today as widely anticipated, noting uncertainty around the economic outlook has increased. The central bank made a technical move on the balance sheet, reducing the pace of permitted runoff in its Treasury holdings from $25