Jefferies' Chief US Economist Thomas Simons stated that once the temporary shock from oil prices subsides, the trend of cooling inflation in the United States will persist. He believes that while energy costs may cause a spike in headline inflation, the broader disinflationary trend remains intact due to limited consumer purchasing power—making energy-driven inflation essentially a "zero-sum game." "When you get down to it, it's basically a zero-sum game," Simons remarked in a recent interview. He further explained that when consumers pay more for gasoline and energy, they have less money available for other purchases, which prevents price increases from spreading broadly throughout the economy. This dynamic helps explain why core inflation measures can remain relatively stable even as headline inflation data rises. Simons also addressed the growing divergence between the Consumer Price Index and the Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation gauge. He noted that businesses facing profit pressures from tariffs and wage costs often pass these increases onto "high-margin goods or services, which are typically sold to less price-sensitive consumers"—namely, higher-income individuals—while keeping prices stable for essential goods purchased by lower-income consumers. The economist emphasized that, compared to global central banks like the European Central Bank and the Bank of England, which focus solely on price stability, the Fed has unique flexibility due to its dual mandate of supporting both price stability and employment. Given the US economy's reliance on gasoline for commuting and freight transport, the Fed will consider "the significant risk to economic growth if energy prices remain elevated." Therefore, Simons disagrees with current market expectations that push the first rate cut out to September. He believes the Fed is likely to act sooner, suggesting a cut "could come as early as April, but certainly by June." He also anticipates multiple rate cuts throughout the year, noting that "three cuts are more likely than one." A broader conclusion from Simons' analysis is that as long as energy price pressures do not affect core inflation measures, the Fed can "look past" volatility in headline inflation. "Despite short-term fluctuations in oil markets, the underlying disinflationary trend in the economy appears set to continue," he stressed.