Lazard’s Forecast on Interest Rates

Lazard chief market strategist Ronald Temple expects the Federal Reserve to maintain its current interest rate policy through 2025, diverging from market expectations of multiple rate cuts.

Temple highlighted ongoing inflation risks as the main reason behind his forecast, noting a significant difference from broader market consensus. Many analysts predict up to three rate cuts this year, while Temple argues that higher U.S. tariffs will increase inflation, making quantitative easing unlikely.

> “My view differs from the consensus because I expect U.S. tariffs to expand in scope and size through 2025 and increase inflation,” said Temple. He added that inflationary pressures might not lead to rate hikes but could prevent the Fed from cutting rates even if unemployment rises.

The Federal Reserve is anticipated to keep its benchmark interest rate unchanged in their upcoming meeting, adopting a cautious “wait and see” approach. Economists agree that the Fed has a challenging balancing act as President Donald Trump’s tariff policies are likely to boost inflation while slowing economic growth.

The pivotal question remains whether Fed officials will overlook the short-term inflation increase and proceed with rate cuts, as markets expect, or await clearer signs that inflationary pressures are fleeting, according to Diane Swonk, chief economist at KPMG.

This is not investment advice.