Once again, economic woes in the US are high on the agenda. This time, inflation has been accelerating again on the back of the tariffs imposed by US President Donald Trump. This surge could last longer than expected, analysts at Bank of America (BofA) warn.

The bank’s experts presented their forecast in the weekly economic review ahead of the US Consumer Price Index (CPI) report for April, which was released on May 13. According to BofA’s analysts, a comprehensive assessment of the tariffs’ impact on the economy will be available by the end of May and in June.

However, the bank believes that the inflationary impact of the tariffs is a temporary phenomenon. At the same time, the experts caution that "there are valid reasons why this impact may be more persistent than expected."

Previously, analysts and market participants had high hopes for a trade deal between the US and the UK, which would include a reduction in car tariffs from 25% to 10%. However, it did not have much effect on the current situation. BofA believes that this decision "provided relief to the markets" because it signals more trade deals in the near future. We could see some impact of the tariffs on economic data in the short term, mostly through rising car prices, analysts note.

According to BofA’s current forecasts, the peak of pessimism regarding the tariffs has already passed. However, the April CPI report could become a stumbling block, though there is no indication of this yet. The bank predicts a 0.2% increase on month in both headline and core inflation. BofA also expects that the annual core inflation rate will remain unchanged at 2.8%, while the headline inflation will slightly decrease to 2.3%.

Since the Federal Reserve has put interest rates on hold, the bank believes that the regulator will adopt a wait-and-see stance in the near future. "With the base scenario of a stable labor market and rising inflation, there is no need for rate cuts in 2025," BofA concludes.