That's the opinion of James Knightley, chief economist, US, at ING. He notes December inflation data was weaker than expected and confirms tariffs aren't having the immediate impact on prices that most feared. "The fact it is coming through so slowly gives more opportunity for falling energy costs, slowing housing rents and weaker wage growth to mitigate," he says in a note to clients.

Goods that are often imported and therefore subject to tariffs include appliances (-4.3% MoM), furniture (-0.4% MoM), new vehicles (0.0% MoM) and video and audio equipment (-0.4% MoM). This is a remarkable story and suggests US retailers are squeezing their profit margins. Used vehicles also fell in price (-1.1%).

With Fed Chair Jerome Powell suggesting that the tariff impact hasn't got much further to run and could peak in this current quarter, it indicates that policymakers are on course to cut interest rates further, he says. 

There's still a bit of risk from tariffs, Knightley says, but  the fact it has come through so slowly and much less forcibly than feared gives the opportunity for falling gasoline prices, slowing housing rents and weakening wage growth to contribute to CPI continuing to trend lower this year, getting very close to 2% towards the end of the year.