World economy to witness worrying uncertainties in 2025 due to Trump Tariffs?

Uncertainties around U.S. policies may slow global economic growth modestly in 2025, according to major brokerages. They expect U.S. President-elect Donald Trump's proposed tariffs to fuel volatility across global markets, spurring inflationary pressures and, in turn, limiting the scope for major central banks to ease monetary policy, as per a report.

World economies and equity markets have had a robust year, with global growth expected to average 3.1 per cent this year, a Reuters poll published in October showed. Forecasts from some top banks on economic growth, inflation and the performance of major asset classes in 2025 have resonated the broader overview, Reuters reported.

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Major brokerages reiterated their view of a 25-basis-point (bp) interest-rate cut by the U.S. Federal Reserve in December after data on Wednesday showed the personal consumption expenditures (PCE) price index rose in-line with market expectations. Data showed PCE climbed 0.2 per cent in October on a monthly basis, and grew 2.3 per cent annually, matching market expectations, according to a report on Reuters.

Core PCE, which strips out volatile food and energy items and is the Federal Reserve's preferred gauge of inflation, was also in line with estimates. Minutes from the Fed's November meeting, released on Tuesday, showed policymakers were uncertain about the outlook for interest-rate cuts and how much the current rates were restricting the economy. The Fed reduced rates by 25 basis points earlier this month, lowering its benchmark overnight interest rate to the 4.50 per cent-4.75 per cent range, Reuters reported.

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FAQs

Q1. What is status of World economies and equity markets?
A1. World economies and equity markets have had a robust year, with global growth expected to average 3.1 per cent this year, a Reuters poll published in October showed.

Q2. What is expected U.S. Federal Reserve interest rate cut?
A2. Major brokerages reiterated their view of a 25-basis-point (bp) interest-rate cut by the U.S. Federal Reserve in December after data on Wednesday showed the personal consumption expenditures (PCE) price index rose in-line with market expectations.