Fed May Acknowledge Tariff-Driven Inflation Is a Non-Issue, Says Tom Lee
Happy Fed Day to all who follow closely. While markets are pricing in a 98.8% chance the Fed will leave rates unchanged, Fundstrat’s Tom Lee says there’s still room for market fireworks.
Lee, a perennial bull, isn’t expecting a rate cut — but sees potential for a positive market reaction if the Fed shifts its tone.
“We think it will acknowledge inflation is undershooting expectations,” says Lee. “They’ve previously blamed tariff uncertainty for their pause, but recent inflation data has been soft.”
Indeed, May’s consumer price index rose just 0.1%, import prices were flat, and real-time pricing data show little impact from tariffs.
Lee points to falling market-based inflation measures — now at their lowest levels in a year — and partisan noise in consumer inflation surveys as factors the Fed can’t ignore much longer.
“So the Fed will have to relent and lean dovish again,” Lee argues.
He remains confident the stock market is on track to reclaim all-time highs — the S&P 500 is less than 3% away — and cites bitcoin’s recent record as a leading signal. His year-end target for the S&P 500: 6,600.
