LIVE MARKETS-Do we have to use The word?

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DO WE HAVE TO USE THE WORD?

Bank of America first teased the "S" word with a reference to a "little stag-, and more -flation" and then just went and said the dreaded word directly in a section subtitled "Baking some stagflation into the pie," in its U.S. economic Weekly.

BofA U.S. economists, led by Aditya Bhave, also went ahead and tweaked their estimates for this year with a more bearish tilt.

To reflect trade policy developments and recent data, said they were cutting their growth estimate for Q4/Q4 growth this year to 1.8% from 2.3% and raised their inflation forecasts.

For the second half of the year they're now forecasting core PCE will reach 3.0% y/y.

And faced with "modest stagflation," they see the Fed staying on hold. While they see a wide range of potential outcomes from the April 2 tariff announcements, they say "risks are skewed toward weaker growth and even higher inflation."

And for more backward looking data due in the week ahead, they estimated that headline and core PCE inflation to come in at 0.3% m/m for February, "though there is a risk that the core rounds up to 0.4%."

They estimate a nominal personal income increase of 0.4% on solid job and wage growth and forecast a 0.7% pickup in nominal spending on the month. And on the goods side they see both control group retail sales and auto sales having increased sharply in February. "We expect solid gains in services spending as well, after some softness in January," they said.

(Sinéad Carew)

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