Fed expected to delay rate cuts as inflation risks rise, economists say (Reuters poll)

The U.S. Federal Reserve is now expected to hold off on cutting interest rates until next quarter, as concerns over inflation grow, according to a Reuters poll of economists. Many who previously anticipated a March rate cut have now pushed back their forecasts.

A majority of economists surveyed between February 4-10 expect at least one rate cut by June, though opinions vary on the timing. Out of 101 respondents:

• 22 expect a cut in March
• 45 anticipate a cut in the second quarter
• Only 17 forecast a cut in the second half of 2025
• 16 expect no cuts this year

Interest rate futures suggest a just over 50% probability of one rate cut by mid-2025.

Main points:

Since Trump’s re-election , inflation forecasts have been revised upward, with economists citing tariffs as a key risk to price stability.

Over 90% of respondents who participated in both the October and February surveys raised their 2025 inflation forecast, with an average upward revision of 40 basis points. Nearly 60% believe tariff-related inflation risks have grown, while only two economists said they had declined.

Following 100 basis points of rate cuts between September and December, Fed Chair Jerome Powell and other officials have signaled that they are not in a rush to lower rates again. With a strong job market and resilient consumer spending, many analysts believe the U.S. economy does not currently need additional stimulus.

This article was written by Eamonn Sheridan at www.forexlive.com.