Survey shows: Tariffs exacerbate inflation pressure, and the Federal Reserve's next rate cut may be delayed until the second quarter

According to the Zhitong Finance APP, a survey shows that in the face of rising inflation threats, economists expect the Federal Reserve to wait until next quarter to cut interest rates again, whereas they previously anticipated a rate cut in March.

Since Trump won the U.S. election last November, economists have raised their inflation forecasts due to concerns that Trump's policies, particularly his tariff policies, could reignite price pressures in the economy.

After a cumulative rate cut of 100 basis points from September to December last year, Federal Reserve officials, including Chairman Jerome Powell, recently stated that they are "not in a hurry" to cut rates further.

Due to a strong labor market and robust consumer spending, many economists believe the U.S. economy is in a favorable position, with little need to lower interest rates.

So far, new tariff news has emerged weekly.

Trump stated on Sunday that he would impose a new 25% tariff on all imported steel and aluminum. The U.S. has postponed its plans to impose tariffs on Mexico and Canada until March 1, but will impose an additional 10% tariff on goods imported from China.

James Knightley, Chief International Economist at ING, stated: "Tariffs will lead to inflation and could adversely affect economic growth. This uncertainty means the Federal Reserve can only wait and see what happens."

He added: "Donald Trump's policy focus has many variables, some of which are even contradictory. This is very, very challenging, so our confidence in any predictions about the U.S. economy and global economic activity is very low."

In a January survey, nearly 60% of economists expected the Federal Reserve to cut rates in March, but in a survey conducted from February 4 to 10, their views on the timing of the next rate cut diverged.

Two-thirds of forecasters (67 out of 101) expect at least one rate cut by the end of June, with 22 expecting a cut in March and 45 expecting a cut in the second quarter.

Among 99 economists making predictions for the end of 2025, only 17 indicated that the next rate cut would occur in the second half of this year, while 16 expected no rate cuts this year.

Interest rate futures prices indicate a slightly higher than 50% chance of a rate cut by mid-2025.

Although the median forecast in the survey predicts that the Federal Reserve will cut rates twice this year, bringing rates down to 3.75%-4.00% by the end of 2025, the range of predictions is wide, with a low of 3.00%-3.25% and a high of 4.50%-4.75%. No majority opinion has formed.

However, economists are more certain about inflation pressures.

From the survey conducted in October last year (before the U.S. presidential election) to the latest survey, over 90% of respondents raised their annual inflation forecasts for 2025, with an average increase of about 40 basis points.

Neil Shearing, Chief Economist at Capital Economics, pointed out: "This uncertainty is likely to keep Federal Reserve officials on the sidelines in the coming months, and if high tariffs are ultimately imposed, the resulting rise in inflation will prevent the Federal Reserve from further easing policy for the remainder of 2025." The median of the survey shows that after achieving an annualized growth of 2.3% last quarter, the U.S. economy is expected to grow by 2.2% this year and 2.0% in 2026, higher than the Federal Reserve officials' current estimate of a non-inflationary economic growth rate of 1.8% in the coming years.

The unemployment rate in the U.S. slightly decreased to 4% last month, with expectations for the unemployment rates to be 4.2% and 4.1% for this year and next year, respectively