Bill Adams, US chief economist at Fifth Third Bank, said in a note that with the Fed no longer offering forward guidance under its current chair, markets will focus on the FOMC’s assessment of core inflation. He expects the policy statement to show mixed inflation drivers: downward pressure from relatively mild house-price and rent gains and fading tariff-related inflation in 2025; upward pressure from higher energy prices linked to Middle East tensions and disrupted Russian exports, a new round

Bill Adams, US chief economist at Fifth Third Bank, said in a note that with the Fed no longer offering forward guidance under its current chair, markets will focus on the FOMC’s assessment of core inflation. He expects the policy statement to show mixed inflation drivers: downward pressure from relatively mild house-price and rent gains and fading tariff-related inflation in 2025; upward pressure from higher energy prices linked to Middle East tensions and disrupted Russian exports, a new round of tariffs, AI-driven demand lifting electronics prices, and labor-supply bottlenecks boosting costs in some services (eg, home health and care). Market participants view the Fed’s next policy decision as hinging on whether these short-term shocks become persistent core inflationary forces.