Major Wall Street brokerages are maintaining their forecasts for a slower pace of interest-rate cuts by the Federal Reserve in 2025. This outlook follows recent data indicating that the U.S. economy added fewer jobs than anticipated in February.
Additionally, economic uncertainty has been heightened due to President Donald Trump’s tariff announcements. On Friday, data revealed that nonfarm payrolls increased by 151,000 jobs in February, a figure lower than the 160,000 jobs that economists surveyed by Reuters had predicted.
This also comes after a downward revision of January’s job creation figure to 125,000. The disappointing job creation numbers could signal a more cautious approach from the Federal Reserve regarding monetary policy adjustments.
Trump’s tariff policies are projected to drive inflation higher, which places added pressure on the Federal Reserve as it seeks to manage rising prices. In light of these economic factors, traders currently anticipate nearly three rate cuts, each of 25 basis points, for the year.
This sentiment is reflected in data compiled by LSEG. The Federal Reserve maintained its benchmark overnight interest rate in the range of 4.25% to 4.50% during its January policy meeting.
Chair Jerome Powell emphasized that there is no urgency to implement further rate cuts until the economic indicators, particularly related to inflation and employment, suggest it is warranted. This cautious stance from the Fed underscores the uncertainty in the economy and the careful balancing act required to foster growth while controlling inflation.