New Tariffs to Push Inflation up 1%: BlueBay
Tariffs will result in a 1% increase in the headline CPI, or consumer-price index, according to Andrzej Skiba, BlueBay Asset Management's head of fixed income.
That will prevent the Fed from cutting interest rates in coming months regardless of likely slowing in economic activity, he said.
The new measures will deliver a 10% increase 'end state' after accounting for retaliation by targeted countries and unwinds of some levies, he said.
Gross-domestic product growth will likely slow to 1.5% but the economy is unlikely to fall into recession, according to BlueBay, which is a unit of RBC Global Asset Management. The combination of higher inflation and slower growth will suppress any temporary relief from the arrival of the long-awaited tariffs, Skiba said.
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