Home News Economists Trim Fed Rate Cut Estimates On Fear of Trump Inflation Surge

Economists Trim Fed Rate Cut Estimates On Fear of Trump Inflation Surge

December 16, 2024

Deregulation, tax cuts and tariffs stoke probability of stubbornly high price growth, FT-Chicago Booth poll finds

by ColSmith and Eva Xiao
FT

The Federal Reserve is set to take a more cautious approach to interest rate cuts on fears that the Trump administration’s policies will stoke higher inflation, according to academic economists polled by the Financial Times.

The economists, who were surveyed between December 11 and 13, moved up their forecasts for the federal funds rate next year compared to the previous FT-Chicago Booth poll in September. The vast majority thought it would hover at 3.5 per cent or higher by the end of 2025, whereas most respondents in September said it would probably fall below 3.5 per cent by that point.

If the Fed follows through with a quarter-point cut at its meeting next week as expected the policy rate will stand at 4.25-4.5 per cent.

Continue Reading at FT.com…

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