ICYMI: Goldman Sachs: Tariff-driven inflation likely to be short-lived

Goldman Sachs expects the inflationary impact of the latest U.S. tariffs to be temporary, with core PCE inflation forecast to rise to 3.6% by the end of 2025 before easing in 2026.

Info via a note by economists:

• bank argues that unlike the 2021–2022 inflation surge, today’s weaker economy—with a looser labour market and slowing wage growth—makes a sustained price spike less likely

Although recent CPI data has shown cooling inflation, Goldman acknowledges the risk that if tariffs escalate or reach “prohibitive” levels, inflation could remain elevated. Still, economists at the bank see these pressures fading by August, potentially opening the door for the Federal Reserve to resume rate cuts later this year. With the Fed holding rates steady and inflation still above its 2% target, Goldman’s outlook hinges on tariffs remaining a one-off shock rather than a prolonged trend.

Anybody remember ‘transitory’?

This article was written by Eamonn Sheridan at www.forexlive.com.