Fitch: Fed expected to cut rates only once this year

On 18 March, Fitch said in its latest global economic outlook that it expects global growth to slow to 2.3% this year, well below trend levels and below 2.9% in 2024, according to Golden Ten. Meanwhile Fitch cut its U.S. growth forecast to 1.7 per cent from 2.1 per cent in December last year, and cut its 2026 growth forecast to 1.5 per cent from 1.7 per cent.

Fitch said the tariff hikes will lead to higher prices for U.S. consumers, lowering real wages and increasing costs for businesses, and the surge in policy uncertainty will weigh on business investment. The tariff shock is estimated to raise near-term U.S. inflation by 1%, and we think the Fed will delay further easing until the fourth quarter of 2025. We now expect the Fed to cut rates only once this year, but expect three more cuts in 2026 as the economy slows and tariff levels stabilise.