A recent analysis by independent authors highlights the persistent struggle against inflation, despite a strong labor market and continued economic growth in early 2025. The findings, outlined in a recent article, emphasize that inflation progress over the past year has been frustratingly slow. This report reflects the authors' views and does not align with the official policy of FXStreet or its advertisers.
The current labor market continues to demonstrate strength, contributing to the solid growth projected to persist through the first quarter of 2025. However, inflation has been slow to respond. The authors suggest that January's retail sales figures might not be reliable indicators due to cold weather impacts. They caution that seasonal effects could skew inflation data, complicating efforts to assess the true economic picture.
Despite disappointing recent Consumer Price Index (CPI) data, the authors speculate that this could be attributed to issues with seasonal adjustments rather than a fundamental economic shift. They anticipate a resumption of disinflation and potential rate cuts on a year-on-year basis if inflation mirrors the 2024 pattern. The authors advise that the Federal Reserve must act based on data without being paralyzed by policy uncertainty.
The report also discusses tariffs, suggesting they may have a modest and short-lived effect on prices. The authors recommend that the Fed should look beyond tariffs when formulating monetary policy. This perspective is shared with the understanding that neither the authors nor FXStreet offer investment advice, nor are they registered investment advisors.