Following the "new bond king," Goldman Sachs also predicts that inflation in the United States will reach 4% this year

Wall Street warns that the global trade war initiated by Trump could undo much of the progress made in combating inflation.

On Thursday Eastern Time, Goldman Sachs informed clients in a report released on Wednesday that key inflation indicators are expected to rise significantly in the coming months against a backdrop of high tariffs and a weak dollar. Since the U.S. has not yet announced its largest tariff measures, price upward pressure will far exceed the Federal Reserve's March forecast.

Goldman Sachs stated that based on the PCE price index favored by the Federal Reserve, with expectations of a 6-8% increase in commodity prices, the core inflation rate (excluding food and energy) is expected to accelerate from 2.6% in March to 3.8% in December. A user on platform X quoted Goldman Sachs' prediction, saying: things did not have to evolve this way.

Things did not have to evolve this way.

Previously, Wall Street Journal reported that "Bond King" Jeffrey Gundlach also warned that under the current trend, the U.S. CPI could exceed 4% by the end of the year, but due to liquidity crises and external shocks to the U.S. government, the Federal Reserve may ultimately have to cut interest rates in a high-inflation environment, or even initiate yield curve control (YCC).

The High Cost of Trade Protectionism

Economists generally believe that while high tariff policies may protect some domestic industries in the short term, they will ultimately be passed on to consumers and businesses through rising prices. Goldman Sachs' latest forecast confirms this view, showing that trade protectionist policies could have a significant impact on inflation.

Goldman Sachs expects that the core commodity inflation rate will soar from 0.4% in March to an astonishing 6.3% in December. In contrast, the Federal Reserve expects the core PCE inflation rate in December to be only 2.8%, indicating a significant gap between the two forecasts.

Analysts expect that by December this year, prices in several consumer categories in the U.S. will rise significantly, including: used cars (+8.3%), household appliances (+7.8%), video/audio/computers (+7.7%), jewelry/watches (+5.9%), and pharmaceuticals/medical supplies (+7.8%).

The report's analysis points out that this means consumers will face widespread price increases for a range of necessities and non-essentials, further squeezing household budgets, especially as the Federal Reserve continues to pause interest rate cuts. Investors need to pay special attention to this trend, as higher-than-expected inflation could lead the Federal Reserve to continue delaying its anticipated interest rate cut plans