IMF expects the Fed to reduce rates once as tariffs initially push inflation higher before it subsides

IMF Anticipates Single Fed Rate Cut This Year

On the 25th (local time), the International Monetary Fund (IMF) announced its expectation that the U.S. Federal Reserve will reduce its key interest rate once before the year concludes. According to the IMF’s latest economic outlook for the United States, the federal funds rate is forecasted to fall within the range of 3.25% to 3.50% by the end of the year. Currently, the rate stands between 3.50% and 3.75%, indicating a likely decrease of 0.25 percentage points during 2024.

This projection from the IMF contrasts with President Donald Trump’s calls for a more aggressive rate reduction. The IMF also noted that the personal consumption expenditures (PCE) price index, which serves as a primary indicator for interest rate decisions, remains a key factor in their assessment.