Fitch: Fed Expected to Cut Interest Rates Only Once This Year

On March 18th, the international rating agency Fitch Ratings stated in its latest Global Economic Outlook that it anticipates global economic growth to decelerate to 2.3% this year, which is significantly below trend levels and also lower than 2.9% in 2024. Simultaneously, Fitch Ratings reduced its US economic growth forecast from 2.1% in December of last year to 1.7% and lowered its 2026 growth forecast from 1.7% to 1.5%. Fitch Ratings mentioned that tariff hikes would result in higher prices for US consumers, reduce real wages, increase business costs, and a sharp increase in policy uncertainty would have an impact on business investment. It is estimated that the tariff shock will cause US inflation to rise by 1% in the short term. We think that the Federal Reserve will postpone further policy easing until the fourth quarter of 2025. We now expect the Fed to only cut rates once this year. However, with the economic slowdown and the stabilization of tariff levels, we anticipate three more rate cuts in 2026. (FXStreet)