From Yahoo Finance: 2025-03-28 12:53:00

The U.S. Federal Reserve’s plan for a soft landing faces challenges as consumer caution and rising inflation risks emerge. Data shows weak spending and increasing inflation, prompting Goldman Sachs to cut first-quarter growth forecast. Inflation expectations are climbing, making policymakers nervous about inflation and less likely to cut interest rates.

Consumer expectations of inflation are rising, with long-run expectations exceeding the Fed’s target. Analysts warn of “stagflation” – inflation coupled with rising unemployment. Fed officials acknowledge the tension between stable inflation and maximum employment goals, potentially leading to rate hikes. The Fed’s outlook of falling inflation allowing for rate cuts may shift with rising inflation expectations.

Read more: Weak spending, sticky prices, rising inflation expectations a bad mix for Fed