Tariff-Driven Price Pressures to Ease: Analyst Sees End of Fed’s Inflation Fight
A senior strategist at Russell Investments says the Federal Reserve’s anti-inflation campaign is approaching its final phase, even though price pressures have yet to fully normalize. According to the report, underlying inflation has softened as the U.S. labor market gradually moves back toward balance, helping temper services inflation — historically a sticky component of overall prices. At the same time, tariff-driven inflationary pressure is expected to gradually subside in the second half of 2026, reducing a key source of recent price impetus.
Sluggish activity in the U.S. real estate market — another inflation driver — is also seen as supporting more muted future price growth. Even if the U.S. economy grows at or slightly above trend this year, the strategist believes inflation should remain manageable through 2026, bolstering views that inflation risks are receding.
Market Implication: This assessment supports broader expectations that weaker inflation may give the Fed greater flexibility on monetary policy, potentially reducing the urgency for further rate hikes.