No Quick Rate Cuts in the US

The International Monetary Fund (IMF) estimates that inflation in the United States will not return to the Federal Reserve’s 2% target before early 2027. This means that significant interest rate cuts are unlikely in the near future.

In its latest review of the US economy, the IMF pointed to growing fiscal imbalances as a key source of concern. The Fund projects that the current account deficit will remain elevated, ranging between 3.5% and 4% of GDP in the near term. At the same time, the federal budget deficit is expected to stay between 7% and 8% of GDP in the coming years — more than twice the level projected by Treasury Secretary Scott Bessent. Public debt, meanwhile, is forecast to reach 140% of GDP by 2031.

Managing Director of the International Monetary Fund, Kristalina Georgieva, stressed that the current deficit level is too high. Nigel Chalk, the IMF’s representative for the Western Hemisphere, emphasized that fiscal consolidation — rather than tariffs — is the most effective path to reducing it. His comments followed a ruling by the Supreme Court of the United States, which found that broad tariffs introduced by the administration of Donald Trump were unlawful, forcing the government to look for alternative legal measures.

The Fund also warned that the rising debt-to-GDP ratio and the growing share of short-term borrowing pose increasing risks to both US and global financial stability. At the same time, the economic growth forecast for 2026 stands at 2.4%, suggesting that the economy remains resilient and does not currently justify aggressive monetary easing.

A day earlier, President Donald Trump stated in his State of the Union address that borrowing costs were declining. He claimed that mortgage rates are at their lowest level in four years and that annual mortgage servicing costs have fallen by nearly $5,000 since the beginning of his term. However, according to the IMF, macroeconomic data do not point to a rapid return to cheap money.

For risk assets, including cryptocurrencies, this outlook calls for greater caution. Persistent inflation and elevated fiscal deficits reduce the chances of aggressive rate cuts this year. While the IMF does not predict a crisis, it stresses that under the current fiscal trajectory, rate reductions may come more slowly than investors expect.