Fed expected to cut rates twice this year, starting in September

The Federal Reserve will keep interest rates steady through the first half of the year, before delivering two reductions beginning in September, according to economists surveyed by Bloomberg News.

Fed officials have signaled they may be on hold for some time amid uncertainty around President Donald Trump’s economic policies, particularly on trade. Those policies – proposed and implemented – led most economists to dial back forecasts for growth, while upping projections for inflation, the survey showed.

Trump has threatened or implemented new tariffs on America’s largest trading partners, including China, Canada and Mexico, but has frequently vacillated on the specifics of his plans. The uncertainty has rattled financial markets, and stoked concerns the U.S. may face slowing economic growth while inflation remains elevated, a situation economists call stagflation.

“The Fed is in a very tough spot right now, facing a more stagflationary outlook even as core inflation remains well above its medium-term target,” said Scott Anderson, chief U.S. economist at BMO Capital Markets. “Uncertainty around the magnitude, duration and targets of future tariffs further complicates the monetary policy outlook. They have the potential to roil monetary policy expectations as well as financial markets.”

The vast majority of respondents see the risks to inflation and unemployment as primarily to the upside, according to the survey conducted March 7-12.

As for next week, Fed Chair Jerome Powell and fellow policymakers are widely expected to leave the central bank’s benchmark interest rate unchanged in a range of 4.25% to 4.5%. Economists anticipate policymakers’ updated projections to also show two quarter-percentage point reductions this year.

Forecasters see these cuts in September and December

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