**********Bank of America analysts pointed out in a recent report that the Trump administration's trade, fiscal, and immigration policy agenda is expected to drive moderate inflation, and they anticipate that the inflationary pressures brought about by these policies will begin to reflect in the second half of 2025. According to Bank of America's forecast, Trump's policy changes, especially tariffs and fiscal measures, will have a profound impact on the commodity and labor markets, thereby pushing up price levels.

Trump's trade, fiscal, and immigration policies may trigger mild inflation, and these changes are expected to begin to manifest in the second half of 2025, "wrote an analyst at Bank of America. They also pointed out that if new tariff measures are added in the coming weeks, it may prematurely push up inflationary pressures.

Tariffs may accelerate inflationary pressures

Analysts point out that changes in tariff policies may exacerbate inflationary pressures and the impact may manifest earlier. The current market is already in a high tariff environment, and if Trump further increases tariffs on imported goods, it may lead to further price increases, especially in the energy, manufacturing, and consumer goods sectors.

Bank of America emphasizes that whether policy changes will affect long-term inflation expectations is a key issue. They stated that although market-based inflation indicators are still within historical ranges, they may be affected in the futureTrump's policiesFurther impact.

The outlook for the Federal Reserve's monetary policy

The Bank of America reiterated its position that the Fed's rate cutting cycle has ended and expects the Fed to maintain the current high interest rate levels. According to Bank of America's forecast, the overall and core CPI for January increased by 0.3% month on month. If this prediction is realized, it is expected that the Federal Reserve will continue to remain inactive and maintain its current monetary policy unchanged.

Bank of America analysts point out that although inflation remains above the Federal Reserve's target level, it may be difficult for inflation pressure to significantly increase in the short term under the influence of the Fed's interest rate policy. Therefore, the Federal Reserve will continue to observe and may not quickly adjust its monetary policy.

Editor's viewpoint: Trump's trade and fiscal policies are shaping future inflation expectations, and this impact may manifest in the second half of 2025. Although the Federal Reserve has not shown any signs of interest rate cuts at present, if the continuous adjustment of tariffs and policies intensifies inflationary pressures, the Federal Reserve's future monetary policy may face more challenges. The market will closely monitor inflation data and the attitude of the Federal Reserve to evaluate the direction of future monetary policy.