The escalating trade tensions and imposition of new tariffs are causing financial institutions to reconsider their forecasts for the Federal Reserve's monetary policy. Even the most hawkish analysts are now considering the possibility of a rate cut in 2024. Deutsche Bank, previously the most hawkish on the Fed's 2024 policy outlook, is facing a challenge to its forecast due to the impact of tariffs. The bank's chief economist acknowledged that if trade uncertainty negatively affects the labor market, the Fed could cut rates this year. However, Deutsche Bank is taking a cautious approach, preferring to monitor the duration and scope of the tariffs' impact before revising its official forecast. New York Fed President John Williams also emphasized the uncertainty surrounding tariffs and their potential impact on inflation, market sentiment, and economic growth. Despite these concerns, Williams remains generally optimistic about the U.S. economy, citing the strong labor market and a gradual slowdown in inflation. He expressed confidence in the current monetary policy's ability to adapt to changing economic conditions and concluded that there is no need to change the interest rate policy at this time.



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