The Inflation Outlook

In this J.P. Morgan Asset Management podcast, Chief Strategist David Kelly discusses the economic outlook for the week of August 11th, 2025, focusing on inflation and the Federal Reserve's expected response. Kelly anticipates a rise in inflation, influenced by tariffs but tempered by other factors, and expects it to remain above the Fed's 2% target. He also projects the Fed will cut interest rates despite this, a move he believes is not justified by economic conditions but influenced by political pressure. Kelly further analyzes the impact of tariffs on import prices and consumer costs, noting the complexities and uncertainties involved. He also highlights factors that could either offset or exacerbate inflationary pressures, such as shelter and energy costs, a weakening dollar, labor supply issues, and potential fiscal stimulus. The podcast concludes with a discussion of asset prices and the risks of low interest rates, as well as an expectation for the Fed to cut rates despite these risks.