The economy continues to do well with GDP growing strongly, employment growth solid and core inflation pressures easing again. We are concerned, however, that the Trump administration’s policies will weigh on GDP growth over the course of this year. Providing that Trump waits until around mid-year to impose tariffs, we still see scope for the Fed to cut interest rates twice in the first half of 2025, taking the fed funds target rate to between 3.75% and 4.00%.
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