Economists are reevaluating their predictions for future interest rate cuts amid growing concerns about an inflation surge under President Donald Trump. Initially, experts forecasted a reduction in rates due to slowing economic growth. However, the recent surge in inflation has led many to reconsider this stance.
The shift in sentiment is largely driven by the expectation that Mr. Trump’s policies will increase inflationary pressures. This includes tax cuts and increased government spending, which are likely to boost economic activity but also lead to higher prices.
As a result, economists now estimate a smaller reduction in interest rates than initially anticipated. The change in outlook reflects a more cautious approach to monetary policy, with some experts warning that an overly aggressive rate cut could exacerbate inflationary pressures.
Source: https://www.ft.com/content/50ec8049-58ca-4a8f-abe5-9036a0cb0317