Stagflation, a scenario of high inflation, weak growth and elevated unemployment, has become a topic of concern for economists and traders amid US trade tariffs, sticky services inflation and slowing GDP growth. Recent tariff hikes have pushed costs higher for many imported goods and consumer inflation expectations have risen with annual headline inflation projected to approach 3.9% by year end as tariffs are implemented. However, the argument for stagflation remains limited due to continued weakness in goo ...

Inflation & Tariffs Impact - Tariffs are generating inflation, evidenced in the June CPI report [1] - Approximately $30 billion per month in tariff revenue is being collected [3] - The impact of tariffs on consumer prices is starting to show, with companies intending to pass costs to consumers [3][4] - The process of tariffs impacting prices is slower than initially expected [5] Monetary Policy & Inflation Management - The Fed is cautiously "looking through" goods inflation by not raising rates, considering these as potentially one-time price effects [6][7] - The Fed aims to manage inflation efficiently, avoiding premature action that could necessitate future interventions or delayed action that could harm the labor market [8] - The Fed is committed to keeping inflation under control using its tools [7][9]