FedIntrerest Rate may freeze for two years if inflation goes against the wind, with Federal Reserve officials estimating two rate cuts this year, but with a high degree of uncertainty, according to Bank of America.

Amid market concerns that the Trump tariff war may boost inflation, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, said today that the Fed should maintain the Intrerest Rate at the current level to continue exerting downward pressure on inflation. He expects the Fed to cut rates twice in 2025, but also emphasized the uncertainty of this prediction is rising. (Previous summary: Interest rate cuts fall through? Fed officials hawkish 'may need to raise rates to curb inflation reversal') (Background: Fed fears tariff impact on inflation, calls for 'slower rate cuts,' Fed megaphone: balance sheet shrinkage may slow or pause) The Fed kept the Intrerest Rate unchanged last month at 4.25% to 4.5%, indicating the need for more time to observe further changes in inflation and how President Trump's tariff policies will affect the economy. Fed officials estimate two rate cuts this year Against this backdrop, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, said today that the Fed should maintain the Intrerest Rate at the current level to continue exerting downward pressure on inflation: We need to maintain the status quo. We can say that we are fulfilling the employment mission, and now we must control the mission of price stability. We need to take a restrictive position. Bostic expects two rate cuts this year, but in the context of widespread uncertainty, there may be more or less rate cuts to ensure that inflation does not suddenly erupt. His overall inflation expectation is downward volatility, and inflation is moving towards the 2% target but has not yet achieved it. The Fed's goal is to achieve a return to the 2% target without damaging the labor market. In Bostic's view, companies are optimistic about deregulation but worried about the impact of tariff and immigration policy changes. He believes signs of easing are emerging in the labor market, the current Benchmark Intrerest Rate is moderately restrictive, and this restrictiveness needs to be maintained. Due to upcoming policy changes, economic slowdown is a major issue, but companies expect a steady rise in the economy by 2025. Tariff and other policy impacts on rate decision Bostic said last week that monetary policy is in good shape, but officials must stay alert amid heightened policy uncertainty, which could affect the labor market and inflation. He mentioned that trade, immigration, energy, and fiscal policies may change, stating that there is still a very high degree of uncertainty about many key factors: There is a good chance that my outlook today will be different from the outlook six months from now. In Bostic's view, the Fed still has room to cut rates and has not reached a 'neutral level,' where the Intrerest Rate neither stimulates nor suppresses the economy. The current Intrerest Rate is within a moderately tightening range, and the neutral Intrerest Rate should be between 3% and 3.5%. Given that some of Trump's policies may push up inflation while others such as taxes and regulations may promote investment, Bostic believes that pausing rate cuts and observing the economic trends is more appropriate. Market expects rate cuts to resume in June The CME FedWatch tool indicates that the market expects the Fed to resume rate cuts in June and may cut rates again in September, betting on two more rate cuts within the year. BofA estimates Fed Intrerest Rate freeze for two years However, the views of Wall Street and Fed officials seem to differ significantly. Brian Moynihan, CEO of Bank of America, pointed out at a Washington seminar this week that inflation may take several years to eliminate, predicting that the Fed needs to keep the Intrerest Rate unchanged until 2026 to completely resolve the inflation issue. Assuming Moynihan's view is correct, this may not be good news for the global risk investment market. However, we also know that the views of these managers often change, so let's wait for more economic data to make a judgment.