ANZ Bank: Even if tariffs exacerbate inflation, the Federal Reserve may still further cut interest rates

Golden Finance reports that the Trump administration has confirmed that tariffs on imported goods from Mexico and Canada will take effect on March 4, with reciprocal tariffs set to take effect on April 2. Brian Martin, G3 Economic Director at ANZ Bank, stated that if the impact of the tariffs remains unchanged for the rest of this calendar year, it could keep the US core PCE inflation rate around 2.6%-2.9%, compared to a pre-tariff estimate of 2.4%.

He added that these estimates do not consider possible second-round effects or offsets against weak demand. Nevertheless, Martin said, the Federal Reserve may remain patient and pay attention to one-time price increases. ANZ Bank continues to believe that the Fed will cut interest rates by another 75 basis points during this cycle and resume cuts in the second half of 2025.