Fitch Cuts Global Growth Forecast to 2.3% Citing Tariff Hikes
1min read Fitch Ratings, a prominent international rating agency, has revised its outlook for global economic growth, projecting a slowdown to 2.3% for the current year. This figure is notably lower than the trend levels and the 2.9% growth anticipated for 2024. The agency has also adjusted its forecast for the United States, reducing the expected economic growth from 2.1% to 1.7% for this year and further down to 1.5% for 2026. This revision is attributed to the impact of tariff increases, which are expected to drive up consumer prices, decrease real wages, and elevate business costs. Additionally, the surge in policy uncertainty is likely to affect business investment negatively. The agency estimates that the tariff shock could boost US inflation by 1% in the near term.
In response to these economic challenges, Fitch Ratings anticipates that the Federal Reserve will delay further policy easing until the fourth quarter of 2025. The agency now expects the Fed to implement only one interest rate cut this year. However, with the economic slowdown and stabilization of tariff levels, Fitch Ratings foresees three additional rate cuts in 2026. This cautious approach by the Federal Reserve reflects the agency's assessment of the current economic landscape and the potential impacts of tariff policies on inflation and business investment.
Ask Aime: What is the impact of Fitch Ratings' revised outlook for global economic growth on the stock market?
