Bloomberg Talks Goldman Sachs Chief Economist Jan Hatzius Talks Inflation
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Jan 7, 2025 
Jan Hatzius, the Chief Economist at Goldman Sachs, shares valuable insights into inflation trends and the Federal Reserve's actions. He discusses how the potential tariffs proposed by President-elect Trump could slow down the decrease in inflation. Hatzius also predicts three interest rate cuts this year, despite current market fluctuations. He dives into the economic implications of these tariffs and rising populism in Europe, shedding light on their potential impact on growth and monetary policy.
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Economic Outlook
- Jan Hatzius believes the economy is poised for strong growth and decreasing inflation.
- He notes a rebalancing labor market with lower utilization than in 2018-2019.
Justification for Rate Cuts
- Despite strong economic indicators, Hatzius expects three Fed rate cuts in 2025, characterizing this as "normalization" rather than easing.
- He cites high funds rate and labor market rebalancing as justification.
Tariff Impact
- Hatzius's base case includes tariffs on China and auto tariffs on the EU and Mexico, leading to slightly negative growth and increased inflation.
- He notes that while markets focus on the inflationary impact, there are also risks associated with a more aggressive tariff approach.