Fed’s 2025 Rate‑Cut Dilemma: Tariffs, Stagflation Trade & S&P 500 Risks
Key takeaway: Stifel analysts argue the Fed’s pause on rate cuts is justified given tariff‑driven inflation uncertainty, yet they warn of a 12% S&P 500 correction—here’s why and where to pull the data.
Tariff uncertainty: Trump’s aggressive levies cloud the inflation outlook—pass‑through effects remain unclear.
Inflation vs. growth: Core CPI hovers above 2%, but remains benign despite tariff pressures.
Policy tools: Powell emphasizes his target rate as the main policy lever, even as other tools (balance‑sheet, guidance) play supporting roles.
No Fed Chair since Marriner Eccles in 1948 has skipped a rate hike in their final year.
Powell, whose term ends May 2026, bucks that trend, signaling caution over premature easing.
Stifel sees slowing core GDP combined with persistent inflation favoring “stagflation” trades (commodities, defensives).
They forecast a 12% pullback in the S&P 500 from 6,279 to around 5,500 if cuts arrive despite sticky prices.
Fed Meeting Dates:
Pull upcoming FOMC and policy minutes with the Economics Calendar API:
Economic Calendar
S&P 500 Forward P/E:
Track evolving valuation multiples via the Ratios TTM API:
Ratio TTM API
Conclusion
The Fed’s rate‑cut debate hinges on tariff impacts and stubborn inflation. By monitoring Fed events and S&P 500 forward P/E, you can position for the stagflation trade or brace for a corrective pullback. Use the Economics Calendar API and Ratios TTM API to stay ahead of Fed signals and valuation shifts.
