Despite rising recession risks and weakening economic growth, the US Federal Reserve is not expected to cut interest rates until the final quarter of 2025, said Fitch Ratings on Wednesday. In a special update to its quarterly Global Economic Outlook, Fitch cited elevated inflation and rising household inflation expectations as key reasons for the Fed's cautious stance. Import-driven price pressures, fuelled by record-high tariffs, are keeping consumer prices elevated even as growth slows. "Fitch still expects the Federal Reserve to wait until 4Q25 before cutting rates despite the deteriorating US growth outlook. Import prices are set to rise sharply and there has been an alarming jump in US households' medium-term inflation expectations over the past two months." 'Deeper' rate cuts in Europe, Emerging Markets Nevertheless, Fitch said global monetary conditions may loosen elsewhere. A weakening US dollar is giving room for rate cuts in Europe and emerging markets. "... we now expect deeper rate cuts from the ECB (European Central Bank) and in emerging markets." Fitch also lowered its 2025 Brent oil forecast by $5 cut to $65, saying lowered commodity prices could further support "a faster pace of monetary easing outside the US ..." Attribution: Amwal Al Ghad English
