The Big Day is Approaching! Asset Management Company Lazard Made a Contrary Prediction About the Fed's Interest Rate Policy: Will There Be a Cut?

Lazard's chief market strategist Ronald Temple said that contrary to expectations of multiple interest rate cuts, he expects the Fed to maintain its current interest rate policy until 2025.

Temple pointed to ongoing inflation risks as the main reason behind its forecasts and noted that Lazard's stance significantly differs from the broader market consensus. While many analysts predict up to three interest rate cuts this year, Temple believes that the increase in customs duties in the U.S. will raise inflation and make monetary easing unlikely.

Temple said, “My view differs from consensus because I expect U.S. customs duties to expand in scope and size until 2025, increasing inflation.” Even though inflationary pressures may not lead to interest rate hikes, he also added that the Fed could prevent interest rate cuts even as unemployment rises.

Due to the cautious 'wait and see' approach of policymakers, it is expected that the Fed will not change the benchmark interest rate at this week's meeting. While President Donald Trump's tariff policies are predicted to increase inflation and slow down economic growth, economists say that the Fed is facing a challenging balancing act.

KPMG chief economist Diane Swonk noted that the key issue is whether FED officials will continue to ignore the short-term rise in inflation and proceed with interest rate cuts as expected by the markets, or wait for clearer signs that inflationary pressures are temporary.