Inflation data released in the US yesterday for February fell below expectations. Following CPI data, expectations regarding the federal reserve’s potential reduction interest rates have been restructured, and Barclays revised its estimate.
The Fed will cut interest rates twice and start again in March 2026!
Barclays has raised its expectations for a Fed rate cut from 1 to 2 in 2025, citing softer labor market conditions despite tariff uncertainty, Reuters reported.
Barclays analysts said they expect the Fed to cut interest rates twice in 2025, and 25 percentage points each in June and September.
The bank had previously forecast a 25 basis point cut in June.
“The weak labor market will lead to other rates being reduced despite high inflation.”
Barclays analysts added that after the latest interest rate cuts this September, the Fed hopes to take a long break from interest rate cuts and resume its interest rate reduction cycle in March 2026.
There will be no interest rate cuts this year!
Barclays doubled expectations for interest rate cuts in 2025 following inflation data released yesterday, but the data did not impress Nomura economists.
Therefore, economists Nomura believe the Fed will not cut interest rates this year.
Despite data that is below forecast yesterday, Nomura said the consumer price index (CPI) component, which weighs higher inflation in core personal consumption expenditures (PCEs), has become stronger than expected.
Economists expect the PCE to continue its upward trend, which will make the Fed take a more hawkish stance in monetary policy and not cut interest rates.
When is the Fed meeting?
The Fed will announce its march rate decision on Wednesday, March 19th. The expectation is that interest rates remain constant.
*This is not investment advice.
