Fed Fund Rates: Federal Reserve may cut interest rates twice this year, but you may get a gift from September itself

The US central bank Federal Reserve may cut interest rates twice this year. This will start from September. But before that, the Fed will keep interest rates stable in the first half of the year. According to a Bloomberg report, Fed officials have indicated that they may hold interest rates for some time due to uncertainty over US President Donald Trump's economic policies, especially trade. The survey has shown that due to Trump's policies, most economists have reduced their forecasts for growth. At the same time, they have increased their estimates for inflation.

Trump has threatened or imposed new tariffs on the US' biggest trading partners, including China, Canada and Mexico, but has often been hesitant to share details on the specifics of his plans. The uncertainty has roiled financial markets, raising concerns that the US could face slower economic growth while inflation remains high, a condition economists call stagflation.

The Fed is in a tough spot right now

According to Bloomberg, Scott Anderson, Chief US Economist at BMO Capital Markets, says, "The Fed is in a very difficult position right now, facing a stagflationary outlook. Core inflation remains well above its medium-term target. Uncertainty about the magnitude, duration and targets of future tariffs further complicates the monetary policy outlook. These have the potential to shake expectations on monetary policy as well as financial markets." According to the survey conducted on March 7-12, most respondents expect inflation and unemployment risks to increase.

The Federal Reserve is scheduled to meet next week. Chairman Jerome Powell and fellow policymakers are expected to leave the Fed's benchmark interest rate unchanged in a range of 4.25% to 4.5%. Economists expect policymakers' updated estimates to also show interest rate cuts of up to two quarter-percentage points this year. On average, forecasters expect the cuts to occur in September and December.

Fed officials have largely said it's too early to know how Trump's policies might affect their decisions on interest rates. "The cost of being cautious is very, very low. The economy is fine. We don't really need to do anything, and so we can and should wait," Powell said earlier this month.