Trade war shakes Bundesbank's hawkish view of Fed, rate cuts during the year no longer out of the question

Deutsche Bank's economics team has one of the most hawkish views on Wall Street regarding Fed policy in 2025, and they are predicting that the Fed won't cut rates this year, according to Golden Ten. While this remains the team's official stance, chief U.S. economist Matthew Luzzetti acknowledged that the impact of Trump's new tariffs could jeopardise this prediction.

‘You've certainly started to see some of the negative impact of trade uncertainty in the economic data,’ Luzzetti said, ’and if that impact widens and is reflected in weak labour market data, the Fed could cut rates this year.’ However, Luzzetti said Deutsche Bank wants to see how long the tariffs will remain in place before changing its forecast for the Fed.