Stagflation is here — and the markets are finally responding. Growth is fizzling out, yet inflation is proving too stubborn for the Federal Reserve to justify action. The result? A cornered central bank, with President Trump and the bond market setting the pace.
This is the stark analysis of Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and asset management organizations.
March’s inflation report might look like progress on the surface. The Fed’s preferred gauge, the PCE index, slowed to a 2.3% annual rise from February’s 2.7%.
But dig deeper, and the picture is far less reassuring. Core inflation, which strips out the volatility of food and energy, held at 2.6%.
Monthly price growth came in flat, not because of disinflationary strength, but largely due to falling energy prices.
“This isn’t progress — it’s paralysis,” says Nigel Green.
“The Fed is boxed in. Price pressures remain elevated, and the economy is clearly showing signs of fatigue. There’s no credible path to rate cuts in this environment.”
Energy costs fell 2.7% in March as global growth concerns dragged oil prices lower. That alone explains the headline softness. But food prices surged 0.5%, the steepest monthly rise in months, highlighting that key areas of consumer strain remain very much intact.
At the same time, consumer spending rebounded by 0.7%, up from just 0.1% in February.
Far from a signal of resilience, this sudden jump is more likely a consequence of front-loaded buying, driven by tariff anxiety and higher short-term costs.
“We’re not seeing organic strength here,” Nigel Green explains.
“Consumers are reacting to rising prices and future uncertainty. This is pressure spending, not a confident boom.”
The Fed is out of time, and out of room to maneuver. For months, markets believed a soft landing could be engineered — inflation brought to heel while keeping the economy intact. That narrative is now unraveling. The data is showing persistent price stickiness and weakening real activity.
At the same time, Trump’s reassertion of control in Washington has altered the Fed’s strategic landscape. With sweeping tariff proposals, aggressive fiscal ambitions, and open discussion of central bank reform, his policies are inflationary by design.
“Trump has flipped the board,” Nigel Green comments.
“His agenda involves heavier government spending and new trade barriers — both of which push inflation higher. The Fed now has to consider not just the economy, but the political shadow being cast across financial markets.”
This is the stagflation environment investors had hoped to avoid — slow growth, elevated inflation, and monetary policy stuck in limbo. Bonds are no longer a safe hedge. Equities face valuation pressure. Currency volatility is climbing. Portfolios built for rate-cut optimism are now exposed.
“Allocations must shift to reflect the new regime,” says the deVere CEO. “That means global exposure, real assets, and selective sectors that can weather persistent inflation and weaker top-line growth. Sitting still isn’t a strategy.”
He concludes: “The Fed isn’t leading. It’s reacting. And right now, the tone is being set from the White House, not the central bank. Monetary authority is no longer the dominant force in markets. Trump is, it would appear.”