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Stagflation Risks Loom for Fed Through 2026

12/21/2025

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Summary

Story summary

Economist Torsten Sløk warns stagflation risks for the Federal Reserve persist into 2026 despite positive indicators.
He says inflation may stay elevated while growth stagnates, complicating the Fed's ability to cut rates.
Sløk adds that risks of rising inflation and unemployment could increase in coming months, especially by April 2026.
January rate-cut probability has edged up, but markets expect rates to hold, with a 45% chance of a March cut.

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Story summary

Economist Torsten Sløk warns stagflation risks for the Federal Reserve persist into 2026 despite positive indicators.
He says inflation may stay elevated while growth stagnates, complicating the Fed's ability to cut rates.
Sløk adds that risks of rising inflation and unemployment could increase in coming months, especially by April 2026.
January rate-cut probability has edged up, but markets expect rates to hold, with a 45% chance of a March cut.