Fed Chair Powell (Q&A) sees goods inflation peaking in the middle of the year

• There is an expectation that in middle quarters of the year, we will see tariff inflation topping out
• Economy has performed well despite big changes in trade policy

Powell’s comments suggest a peak in goods inflation is anticipated mid-year, which could imply a stabilization in price pressures. This outlook is significant as it hints at potential easing in inflation concerns, impacting monetary policy expectations and potentially aligning market sentiment towards a less hawkish Fed stance. Watch for reactions in fixed income and the USD as investors gauge shifts in interest rate trajectories.