Global investment bank (IB) Goldman Sachs projected that the increase in consumer prices due to the tariff hike by the administration of U.S. President Donald Trump will be temporary.
According to Shinyoung Securities on the 27th, Goldman Sachs expects that the core personal consumption expenditures (Core PCE) inflation rate will temporarily rebound to 3.6% in the second half of this year, while also predicting that inflation will not become entrenched.
Goldman Sachs cited economic slowdown as the reason. It would be difficult for price increases to persist as real growth rates fall below potential growth rates and unemployment rises gradually.
Goldman Sachs explained that this inflation is fundamentally different from the structural inflation of 2021-2022. At that time, wage growth was rapid and demand pressures were heightened; however, currently, leading wage indicators are continuously showing signs of slowdown. The household's real consumption capacity is also not currently supported by fiscal effects following COVID-19.
Goldman Sachs stated, "This price rebound is closer to a short-term adjustment of supply-side prices (due to tariffs), and there is limited justification for interpreting it as a resurgence of structural inflation." It implies that the U.S. Federal Reserve is likely to take normalization (rate-cutting) measures once the effects of the tariffs settle down.
However, Goldman Sachs noted that if country-specific tariffs are unexpectedly raised sharply to cause supply chain disruptions, or if trade negotiations are prolonged until 2026, concerns about entrenched inflation may resurface.