In a note to clients, the bank projected that the measures could add between 1.0% and 1.5% to personal consumption expenditures (PCE) inflation in 2025, with the bulk of the upward pressure on prices likely to materialise in the second and third quarters.
Crucially, JPMorgan emphasised that this forecast does not yet incorporate the potential drag from falling exports and reduced investment spending, both of which are likely to come under further pressure. Reports of retaliatory actions from U.S. trading partners have already begun to surface, adding to the downside risks.
While some degree of retrenchment in investment could help narrow the savings-investment gap and the current account deficit, JPMorgan noted that the near-term economic costs may outweigh any potential rebalancing benefits.
The bank said it would revisit its forecasts later this week as more clarity emerges around the policy’s implementation and global response.
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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