Economists: Rate Cut Unlikely as Tariffs Threaten to Accelerate Inflation
A panel of 47 leading economists polled by Wolters Kluwer collectively threw cold water on the prospect of an impending interest rate reduction and warned Trump administration tariffs will worsen inflation.
Only 10% of economists said they expected the Federal Reserve Board to announce a reduction to the target lending rate at its March meeting after pausing cuts in January. The most popular prediction was June (50%) followed by “later in the year” (23%) and May (15%).
Eighty percent of panelists who participated in Wolters Kluwer’s February 2025 Blue Chip Economic Indicators survey said increased tariffs will generate a “significant boost” to inflation.
“The February consensus forecast now places a 48% probability of inflation reaccelerating meaningfully over the next six months. Economists anticipate that PCE inflation to rise to 2.5% in the current quarter, well above the Fed’s 2% target, and to remain at that pace through the first quarter of next year,” analysts write, referring to the personal consumption expenditures price index tracked by the U.S. Bureau of Economic Analysis.
