Economic environment doesn't lend itself to Fed's 2% inflation target: Fifth Third's Korzenik

• Tariffs have not had a significant macro negative economic impact thus far, but a structural shift away from globalization is a key factor influencing inflation.
• The Fed's core inflation measure excludes energy prices due to their variability and the fact that monetary policy is not effective in controlling them.
• Korzenik advises the Fed to 'talk tough' but 'hold steady' this year, awaiting task force conclusions, as rising bond yields are already contributing to the Fed's work.
• He suggests that tightening labor markets will likely force the Fed's hand in 2027 and that the Fed's current 2% hard inflation target, established in 2012 for a deflationary environment, may be inappropriate for today's economy.

Jeff Korzenik, Chief Economist at Fifth Third Commercial Bank, discusses the economic impact of tariffs and the Federal Reserve's inflation target. He believes that a structural shift away from globalization is contributing to inflation, making it difficult for the Fed to meet its 2% target. Korzenik recommends the Fed hold steady this year, as rising bond yields are already helping, and suggests their 2% inflation target might be outdated.