Several major investment banks, including Barclays, Goldman Sachs, Nomura, and Wells Fargo, have revised their outlooks to reflect a greater likelihood of rate reductions in 2025, the BOK's New York office said. Morgan Stanley stood apart, reducing its forecast from one rate cut to none.
On average, analysts at 10 investment banks now anticipate two rate cuts this year, up from a previous consensus of 1.7, reflecting growing unease across financial markets.
The futures market has mirrored that sentiment. Projections for the federal funds rate in June have declined from 4.18 percent in late February to 4.02 percent as of April 4. Expectations for September have fallen more sharply, dropping from 4.07 percent to 3.60 percent in the same period.
“Investment banks predominantly anticipate that higher-than-expected tariffs will place downward pressure on the U.S. economy while simultaneously creating upward pressure on inflation,” the report showed. “Analysts predict the Fed will begin rate cuts only after confirming inflation deceleration.”
Inflation remains a pivotal concern.
Expectations for March climbed significantly, with the one-year inflation forecast rising to 5.0 percent and the five-year outlook reaching 4.1 percent. Both figures represent substantial increases from the previous month — up 0.7 and 0.6 percentage points, respectively.
reporter
Kim Dong-young
davekim0807@ajupress.com
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