The inflation outlook still faces upside risks, as firms likely remain committed to passing tariff-related cost increases through to consumers, underscoring the need for the Fed to “keep [their] eye on inflation and not declare victory prematurely.”

The FOMC will likely continue to emphasize optionality and data dependence as possible inflationary pressures from tariffs could have been masked thus far by import frontloading and the offsetting cooling of shelter inflation.