Analyst: Changes in the Federal Reserve's economic forecasts reflect tariff risks

ChainCatcher message, Fitch analyst Brian Coulton wrote that the latest economic forecasts from Federal Reserve officials reflect the expected impact of tariffs. The Fed now expects the PCE inflation rate to be 2.7% by the end of 2025, up from the December estimate of 2.5%. The GDP growth forecast has been downgraded from 2.1% to 1.7%.

This change "illustrates the adverse effects of tariffs," as tariffs will raise the prices of imported consumer goods and capital goods. Coupled with the recent sharp rise in households' expectations for inflation over the next five years, this makes the Fed's job even more difficult.