Fitch forecasts Fed to cut rates 175 bps by end-2025

Fitch expects the Federal Reserve to end its monetary tightening cycle next month, with the first rate cut beginning in September, totaling 175 basis points (bps) until the end of 2025.

The agency affirmed on Aug. 29 the US credit rating at “AA+” with stable outlook, reflecting its structural strengths including high per capita income and financial flexibility.

However, Fitch warned that high deficit, debt, and political polarization remain a concern. It expects a budget deficit at 8.1% of GDP in 2024 and 7.7% in 2025.

Meanwhile, the government debt-to-GDP ratio will likely reach 124.4% by the end of 2026, Fitch said, noting that economic growth will slow from 2.1% this year to 1.6% in 2025.