CoinVoice has recently learned that Barclays Bank stated one of the factors that may keep U.S. interest rates high is U.S. (inflation) policy. At the December meeting, some FOMC participants clearly began to reflect expectations of tariffs in their inflation forecasts. Moreover, even among those who did not adjust their official forecasts, many now believe that the balance of inflation risks tends to lean upward.
Although Powell did not explicitly answer to what extent the Federal Reserve is inclined to view rising price levels related to tariffs, we believe that it will be a challenge for the Fed to continue cutting interest rates in the context of tariffs expected to exacerbate inflation in the second half of 2025, especially against the backdrop of rising inflation rates in recent years. We expect the Fed to pause rate cuts after June of next year and to resume cutting rates around mid-2026, after the inflation pressures caused by tariffs dissipate. In our baseline, we anticipate two rate cuts of 25 basis points each in 2026, with a terminal rate of 3.25-3.50%. [Original link]