Federal Reserve officials are likely to remain on hold in the coming months, with Deutsche Bank analysts forecasting a wait-and-see approach amid rising uncertainty from President Donald Trump's tariff policies.

Fed Rate Cuts Pushed to December

In its latest note, Deutsche Bank predicted that the Fed won't resume rate cuts until December 2025, followed by two more reductions in early 2026. The goal is to bring borrowing costs to a neutral level of 3.625%, a rate seen as neither stimulating nor restricting economic activity.

• The Fed currently holds rates at 4.25% to 4.5%

• CME's FedWatch Tool suggests a 54.7% chance of a rate cut in September

Inflation and Tariffs Take Center Stage

Trump's aggressive tariff agenda has complicated the inflation outlook. Economists warn that broader duties on imported goods could raise consumer prices and slow economic growth, making it harder for the Fed to act decisively.

Yet, strong May employment data has underscored the resilience of the U.S. economy, softening the case for immediate cuts. Policymakers are expected to await more clarity from upcoming inflation reports before altering their stance.

What to Watch Next

Markets will be closely watching this week's inflation data for signs of persistence or easing in price pressures. Until then, policy patience remains the Fed's guiding strategy.

Track Inflation and Fed Expectations

• Economics Calendar - Stay on top of U.S. inflation, jobs, and Fed meeting outcomes

• Commodities - Monitor how global commodity prices react to U.S. policy shifts