It provides abbreviated economic and asset class views, along with revised 2025 and 2026 forecasts for GDP growth and inflation, as well as March 2026 targets for key policy rates and fixed income, equities, commodities and FX markets.
The economic outlook has become more challenging over recent weeks after the U.S. administration announced and implemented tariff measures that triggered countermeasures from trading partners. The uncertainty regarding U.S. policymaking has also weighed on growth and financial markets.
While some slowing of global growth seems inevitable, we do not expect a severe downturn and believe that growth should start to recover towards the end of the year.
We expect policy uncertainty to remain elevated in the medium term, although peak uncertainty is likely to be behind us. We have therefore revised our forecasts for U.S. GDP growth for 2025 and 2026. Since higher tariffs will probably lead to higher prices, we raise our inflation targets for 2025 and 2026. Against this backdrop we expect the Fed to remain in wait-and-see mode for the next couple of quarters before making its next rate cut in Q4.
We make only slight adjustments to our Eurozone growth forecasts as stronger fiscal expansion should begin to boost activity later this year and we also lower our inflation projections.
Chinese growth is also expected to slow amid high U.S. tariffs. Although we expect fiscal spending by Beijing to increase, it is unlikely to compensate for the decline in exports. Hence, we scale back our growth targets for 2025 and 2026, while inflation is likely to remain low in both years.
