Bloomberg Surveillance Bloomberg Surveillance TV: May 13, 2025
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May 13, 2025 Economists discuss the latest CPI data and its implications for inflation. Tariff policies under President Trump come under scrutiny, as do their impacts on consumer sentiment and the economy. The Federal Reserve’s debate around interest rate cuts takes center stage, influenced by current fiscal dynamics. Currency strategies are explored, particularly the euro's position against the dollar. The complexity of shifting central bank asset allocations away from the dollar in favor of gold and other currencies highlights ongoing geopolitical tensions.
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Fiscal Stimulus Will Boost Inflation
- Fiscal stimulus expected from Capitol Hill will boost consumer spending in 2026 and later in 2025.
- This will keep inflation elevated despite current quiescent consumer activity.
Diversify Beyond U.S. Equities
- U.S. equities appear overpriced compared to international markets given expected slower growth and higher deficits.
- Diversifying into international equities and inflation-protected alternatives is advised.
Fed Rate Cuts Delayed by Inflation
- The Federal Reserve is unlikely to cut rates soon because inflation remains above target despite recessions risks falling.
- Rate cuts may come later in the year after more clarity on tariffs and fiscal stimulus.