ANZ: Even if tariffs exacerbate inflation, the Federal Reserve may further cut interest rates

2025-02-28 15:02:44

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ChainCatcher news, the Trump administration has confirmed that tariffs on imports from Mexico and Canada will take effect on March 4, with reciprocal tariffs set to take effect on April 2.

ANZ's G3 economist Brian Martin stated that if the impact of the tariffs remains unchanged for the rest of this calendar year, it could keep the U.S. core PCE inflation rate around 2.6%-2.9%, compared to a pre-tariff estimate of 2.4%.

He added that these estimates do not account for potential second-round effects or offsets to weak demand. Nevertheless, Martin indicated that the Federal Reserve may remain patient and pay attention to one-time price increases. ANZ maintains that the Federal Reserve will cut rates by another 75 basis points during this cycle and resume rate cuts in the second half of 2025.

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