Tariffs and AI Have Kept U.S. Inflation Elevated

Goldman Sachs research indicates that specific market factors are delaying expected Federal Reserve interest rate cuts.

Updated on Sept. 25, 2026 in Inflation

Isometric editorial illustration of silicon memory wafers stacked against a large shipping container, representing economic inflation pressures. — Goldman Sachs analysts identified tariffs and higher tech memory costs as primary drivers keeping U.S. core inflation 3 percentage points above pre-pandemic trends. AI Illustration. Upload story photo >

Live Poll

Do you feel that inflation's impact on your daily expenses is getting better or worse?

Goldman Sachs researchers reported that U.S. core PCE inflation remains 3 percentage points above pre-pandemic trends due to the impact of tariffs and AI-driven memory prices. These pressures are expected to influence the timeline for future central bank policy adjustments.

Why it matters

Understanding these drivers explains why borrowing costs remain higher for longer than previously anticipated. The research highlights that transitory factors, rather than systemic failures, are currently creating headwinds for the U.S. inflation outlook.

Tariffs currently add 2.4 percentage points to core goods inflation, while AI-driven memory price increases contribute another 1 percentage point. Economists project that AI-related factors may provide a 50-basis-point lift to core PCE by the end of 2026.

The players

Goldman Sachs

A global financial institution that provides investment research and banking services.

Federal Reserve

The central bank of the United States responsible for setting interest rates and managing monetary policy.

The details

Goldman Sachs analysts isolated core inflation by separating goods, non-shelter services, and shelter components while adjusting for international measurement differences. They found that while rent inflation has normalized, tariff costs and technical price distortions in the technology sector have kept core inflation at 3%. These factors act as temporary barriers that complicate the Federal Reserve's path to lower rates.

September 25, 2026: Goldman Sachs published the research report.
Year-end 2026: AI-related factors could lift core PCE by 50 basis points.
December 2026: Goldman Sachs anticipates a potential Federal Reserve rate cut.
March 2027: Goldman Sachs projects a subsequent Federal Reserve rate cut.
Second half of 2027: Tariff impacts on core goods inflation are expected to fade.

Money Landscape

The current inflation overshoot sits outside the normal range observed in recent years due to specific trade and technological anomalies. The findings update expectations for the current interest rate cycle by pushing anticipated easing measures further into the future.

Higher inflation sustained by these market factors suggests that borrowing costs for consumer loans and mortgages may remain elevated through early 2027. Households should review their debt-servicing budgets and consult with a financial professional regarding interest rate sensitivity.

The takeaway

Temporary factors like trade tariffs and AI-driven price spikes are currently the primary drivers of elevated inflation in the U.S. economy. Consider reviewing your interest-bearing accounts or high-interest debt obligations to see how they perform in a higher-for-longer rate environment.

What happens next

Market participants will monitor for the Federal Reserve policy meetings in December 2026 and March 2027 to see if actual interest rate changes align with these projections.