Opinion: Inflation unlikely to fall enough for the Fed to cut rates this year

several Wall Street economists have stated that policymakers are unlikely to be too reassured by these numbers due to the complex calculation methods behind the data and trends in key areas.

Bank of America economist Stephen Juneau stated in a report, "In short, the inflation process in 2025 did not start smoothly. Our forecast of Personal Consumption Expenditures (PCE) inflation further confirms our view that inflation is unlikely to fall enough to lower interest rates by the Fed this year, especially with policy changes pushing up inflation. Unless economic activity data significantly weakens, we believe that policy rates will remain unchanged by the end of the year."

Although the Fed also pays attention to CPI and PPI, it believes that the final say on inflation belongs to the PCE price index. Most economists believe that the latest PCE data to be released later this month will show that the year-on-year inflation rate is at best stable at 2.6%, or even slightly higher, further moving away from the Fed's target of 2%.