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Inflation could reaccelerate if former President Trump wins the White House and Republicans win control of Congress, according to a recent report by Moody’s Analytics.
Under the so-called Republican Sweep scenario, which the forecasters place at a 35 percent probability, consumer price inflation accelerates from 3 percent in 2024 to 3.6 percent in 2025, according to the three economists who authored the report.
Trump policies — including higher tariffs, tax cuts that stimulate the economy and an exodus of foreign immigrants that could tighten the labor market and increase labor costs — would fuel the uptick in inflation.
“The Federal Reserve, which is focused on labor costs and inflation, may feel compelled to resume its rate hikes, or at the very least wait longer to cut rates. Recession becomes a serious threat once again,” the economists wrote.