As the Fed Cuts Interest Rates, Economians Sound Inflation Alarm

Following the Federal Reserve's recent 25-basis-point interest rate cut last week, the persistent intensification of U.S. inflationary pressures has once again become a top concern for economists and market observers.

Recently, a growing number of economists have sounded the alarm on U.S. inflation, warning that the country may be heading toward stagflation and placing the blame for rising inflation squarely on President Trump's trade and tariff policies.

Compared to last year, this proportion has seen a significant increase: last year, 55% of the components in the U.S. CPI index saw price increases exceeding the Fed's target level, while the average for 2018 and 2019, before the COVID-19 pandemic, was 57%.

Analysts expect the Fed to further cut interest rates in October and December. "If the labor market situation worsens more than we expect, there could be a 50-basis-point rate cut," said Goldman Sachs economist David Mericle.

Former U.S. Treasury Secretary Lawrence Summers expressed a similar view last week. He stated, "I think we may be on the brink of stagflation," adding that the economic impact of Trump's tariffs has not yet been "fully felt."

Summers also pointed to broader market risks, suggesting that U.S. consumer and business confidence could further deteriorate.