Bank of America warns that Trump's high tariff plan may exacerbate inflation, and the Fed may not cut interest rates again this year.

The U.S. President-elect Trump is about to take office on the 20th. On Wednesday, the U.S. bank warned that Trump's high tariff policy may cause the Fed to adopt a wait-and-see attitude towards interest rate cuts due to concerns about resurging inflation. The Fed may have completed its final rate cut last month. (Background: BTC price drops to $96,000, Nvidia plunges 6%, causing a market crash. Will the Fed only cut interest rates once this year?) The U.S. bank's U.S. economist Aditya Bhave pointed out in a report to clients on Wednesday that there are increasingly stubborn signs of inflation. Considering the incoming Trump administration, the Fed may have completed its final rate cut: Even without considering fiscal stimulus or tariffs, inflation is already an issue worth following. These policy changes may bring upside risks to the Fed's core personal consumption expenditures (PCE) forecast (we predict 2.8% by the end of 2025). Therefore, if the new administration announces large-scale tariffs shortly after taking office, the Fed may not cut interest rates further. Tariffs are taxes imposed by the government on imported goods. Although U.S. consumers do not directly bear the tariffs, economists warn that some costs will be passed on to consumers in the form of higher prices, which may temporarily increase inflation. According to the Fed's summary of individual policymakers' economic forecasts released last month, officials expect two more interest rate cuts by 2025. However, Fed Chairman Jerome Powell stated at the time that only some members took into account the potential impact of Trump's policies when making predictions. Trump raised tariffs during his first presidential term and promised to further expand them in his second term. It was recently reported that Trump is considering declaring a national emergency as a reason to implement comprehensive tariffs, but the actual scope of the tariffs is still uncertain, and some of Trump's high-profile supporters have expressed opposition to the plan for comprehensive tariffs. Market estimates suggest that there will only be one interest rate cut this year. Amid uncertainty about tariffs, recent inflation data has remained flat but still higher than the Fed's 2% target. Investors' expectations for further Fed rate cuts in 2025 are weakening, and the Fed's benchmark overnight interest rate currently stands between 4.25% and 4.50%. CME's FedWatch tool shows a 95.2% probability that the Fed will keep interest rates unchanged in January, with only a 4.8% chance of a 1-point rate cut. The market currently estimates that the Fed will cut rates only once by the end of December this year. The interest rate on U.S. Treasury bonds has also been steadily rising in recent weeks, another sign that traders expect interest rates to remain high for a longer period. The current 10-year U.S. Treasury bond interest rate is 4.68%, far higher than the 4.178% at the end of November last year. Related Reports: The U.S. dollar hits a nearly two-year high! Analysts: Fed rate cuts and Trump's policies are unfavorable for BTC. BlockTempo: U.S. banks warned that Trump's high tariff plan may exacerbate inflation, and the Fed may not cut interest rates this year.