Is the Fed about to cut rates into an inflation uptick? Inflation—and the politics around it—is back in the spotlight. Expectations for Friday’s PCE figures are for core inflation to tick up to 2.9%, with tariffs and costlier goods pushing prices higher. Economists warn that what began in imported goods is now creeping into services—a much stickier, harder-to-fix problem.
Most on Wall Street still bet the Fed will cut rates next month despite the inflation blemish—highlighting central bank concern for jobs and growth as the tariff shock works its way through the economy (MarketWatch). But if inflation continues creeping up, rate-cut optimism could be on borrowed time. It’s a delicate high-wire act: easing now could turbocharge inflation and weaken the dollar, while waiting may risk a sharp growth slowdown. For now, “sticky” inflation isn’t scaring the market—yet.
