Bank of America warn of US stagflation risk, but expect it to be not too awful

Bank of America economists say that the risk of US stagflation is growing.

They cite “growth negative policies”

• deportations of undocumented workers
• government job cuts
• higher tariffs threats
• heightening risk that fiscal stimulus will be modest and delayed

On that last point BoA nod to the politics of Republicans having only a narrow in the House of Representatives.

Ona brighter, or at least less dark, note NoA expect only a gentle stagflation:

• growth slows but remains at or above trend this year (in the low 2s)
• inflation picks up, mainly because of tariffs, but stays below 3%

And add that they expect that if gowth slides further, or inflation accelerates too much, that Trump will cave in and limit tariffs, spending cuts and immigration restrictions.

Latest on tariffs here:

• Trump Confirms tariffs on Canada, Mexico ‘will go forward’

As a ps. on that post an unnamed Trump official says a decision has not yet been made.

This article was written by Eamonn Sheridan at www.forexlive.com.