Harvard Professor Gita Gopinath warns the US economy faces a potential inflation snapback by 2026. She cites lingering fiscal stimulus and a weak dollar as key vulnerabilities. This warning comes as the Federal Reserve balances its fight against price pressures with supporting growth.

A renewed surge in consumer prices would challenge the Fed’s policy path and could unsettle financial markets. Investors are already pricing in a slower pace of rate cuts. Gopinath’s perspective adds to concerns that structural pressures, not just transitory factors, could rekindle price growth.

The dollar’s depreciation could import inflation by making imports costlier. Meanwhile, expansive fiscal policy may keep demand elevated even as supply chains normalize. Markets will watch upcoming inflation data and Fed communications closely for signals on this risk materializing.