The United States Federal Reserve (Fed) held its Federal Open Market Committee (FOMC) regular meeting in March and froze the base interest rate at 4.25% to 4.5% per year. The dot plot, which indicates the future interest rate forecasts of the Federal Reserve Commissioners, also maintained the outlook for two rate cuts by the end of the year. However, changes in the distribution of Federal Reserve Commissioners in the dot plot and adjustments in economic and inflation forecasts led each securities firm to project different numbers of rate cuts for this year.
According to the financial investment industry, the median value of the dot plot released overnight for 2025 remained at 3.875%. However, the number of Federal Reserve Commissioners projecting two rate cuts this year decreased from 15 to 11. The number of Commissioners who expected one rate cut or a freeze increased from 4 to 8.
The impact of the 'tariff war' led by President Donald Trump is not yet reflected in the hard data, so caution regarding the pace of rate cuts seems to have emerged.
Jerome Powell, the Chairman of the Federal Reserve, assessed during the press conference after the FOMC that the impact of the tariff on inflation is likely to be 'transitory' but noted that it can wait to confirm the effects.
Based on Chairman Powell's press conference and the FOMC statement and economic projections (SEP), different securities firms presented varying forecasts for the number of rate cuts.
Hanwha Investment & Securities adjusted its forecast for the number of rate cuts this year from 3 to 2. In particular, it expects that a rate cut will be difficult in the first half of the year but possible in September and December. Kim Seong-soo, a researcher at Hanwha Investment & Securities, said, 'Initially, it was expected that the tariff impact would be limited and inflation would maintain a slowing path, thus forecasting three cuts for the year, but considering that both the U.S. economy and employment remain solid, the Federal Reserve's policy priority will likely be on price stability, leading to an adjustment of the number of cuts to two.'
Kiwoom Securities also projected that it would cut the base interest rate twice this year, forecasting the timing of the cuts to be in June and September. An Ye-ha, a researcher at Kiwoom Securities, said, 'While the Federal Reserve will likely show a cautious attitude while examining the tariff policy impacts of the Trump administration, it has confirmed its willingness to move in the presence of downside risks to growth, indicating that a rate cut will occur in June and September.'
Korea Investment & Securities maintained its outlook that there will be one rate cut from the U.S. 황 Ji-yeon, a researcher at Korea Investment & Securities, said, 'Although we slightly lowered the projected economic growth rate, considering that the recent rise in product inflation for the past two months is transitory, it is not the time to change the pace of rate cuts.'
The market maintains the view that there will be more rate cuts. According to the Chicago Mercantile Exchange (CME) FedWatch tool, participants in the U.S. federal funds rate (FF) futures market reflected a 54% probability of cutting the base interest rate more than three times by the end of the year.
Shin Eol, a researcher at Sangsangin Investment & Securities, also said, 'There is a high possibility that the Trump administration will use tariffs as a negotiation tool,' noting that 'the Federal Reserve will likely manage economic growth amid a declining inflation trend, thus maintaining the existing outlook for three rate cuts.'
Although views differ regarding the number of rate cuts expected, there was consensus that the impact of tariff policy should become clearer in the upcoming second quarter (April to June) for the Federal Reserve's direction to also become clear. Kim Ji-na, a researcher at Eugene Securities, said, 'The March FOMC took a wait-and-see stance,' adding, 'Time will be needed to confirm the outlines of mutual tariffs, as well as price fluctuations, sentiment, and changes in the hard indicators resulting from them.'