Federal Reserve has room for three more rate cuts: OECD

The Federal Reserve has scope to cut its key interest rate another three times despite above-target inflation, the OECD has said, as it predicted a slowdown in the US economy and labor market.

The OECD expects the US policy rate will be trimmed to 3.25% to 3.5% by spring next year, as high trade tariffs sap the country’s economic momentum.

US growth will slow to 1.8% this year from 2.8% in 2024, before ebbing further to 1.5% in 2026, the organization predicted in its interim economic outlook.

Although the world's largest economy has shown relative resilience in the face of higher tariffs, this is due in part to very strong investment in the information technology sector, including artificial intelligence (AI).