Against the backdrop of increasing global economic uncertainty, Fitch Ratings recently lowered its global economic growth forecast and raised its expectations for US inflation. This adjustment reflects deep concerns about the instability of the US economy and trade policies, while also indicating that the Federal Reserve will face more complex challenges in the future.

1. Downward adjustment of economic growth forecast

In its latest economic outlook report, Fitch Ratings pointed out that the new US government's trade policies have triggered a global trade war, which will lead to a slowdown in US and global economic growth and push up US inflation. Specifically, Fitch has lowered its economic growth forecast for the United States in 2025 from 2.1% to 1.7%, and its GDP growth forecast for 2026 from 1.7% to 1.5%. In addition, the global economic growth rate is expected to slow down to 2.3% in 2025 and remain at a low level of 2.2% in 2026.

2. The impact of tariff policies

Fitch believes that although the fiscal policies of Asian powers and Germany may alleviate the impact of the US raising import tariffs, the economic growth of the eurozone will still be dragged down. Mexico and Canada may experience a technological decline due to their dependence on US trade. The effective tariff rate in the United States has risen from 2.3% in 2024 to 8.5% and may further increase. Fitch expects to impose an effective tariff rate of 15% on countries such as Europe, Canada, and Mexico by 2025, and 35% on China.

3. Impact on Federal Reserve Policy

Imposing tariffs will lead to higher prices for American consumers, lower real wages, and increased costs for businesses, while policy uncertainty will also inhibit business investment. Fitch estimates that the tariff shock will increase the short-term inflation rate in the United States by 1 percentage point, which may force the Federal Reserve to postpone further easing of monetary policy until the end of this year.

summarize

Fitch's series of forecast adjustments not only reveal the severe challenges facing the global economy, but also highlight the profound impact of trade policy uncertainty on economic stability. As the tariff war continues to escalate, the road to global economic recovery will become more bumpy, and policymakers in various countries need to respond cautiously to mitigate potential negative impacts.

Fitch Ratings has lowered its global economic growth forecast, especially the worsening outlook for US economic growth, which may exacerbate market concerns about an economic recession. In the context of increasing economic uncertainty, investors often turn to safe haven assets such as gold to avoid risks. Therefore, the expectation of a slowdown in global economic growth may drive up gold prices.