Investment Rating - The report reverts to a non-recession baseline forecast with GDP growth projected at 0.5% and a 45% probability of recession [4]. Core Insights - President Trump announced a 90-day pause on additional country-specific tariffs, maintaining prior tariffs and a minimum 10% reciprocal tariff, with expectations of further sector-specific tariffs [4]. - The total effective tariff rate is expected to increase by approximately 15 percentage points due to these tariffs [4]. - The previous shift to a recession baseline was reversed following the announcement, leading to a forecast of a peak core PCE inflation rate of 3.5% and three consecutive 25 basis point "insurance" cuts by the Fed in mid-2025 [4]. Summary by Sections - **Tariff Announcement**: President Trump authorized a 90-day pause on additional tariffs for countries that have not retaliated, while the tariff rate on imports from China will rise to 125% [4]. - **Tariff Impact**: The report anticipates a total effective tariff rate increase of about 15 percentage points, combining existing tariffs and new sector-specific tariffs at a 25% rate [4]. - **Economic Forecast**: The report projects a GDP growth of 0.5% for Q4 2025, a peak core PCE inflation rate of 3.5%, and a 45% probability of recession, along with expected Fed rate cuts [4].