Economists have revised their forecast for inflation in the USA next year due to concerns over tariffs, and now expect the Federal Reserve to cut rates one less time than previously anticipated a month ago.

According to the latest Bloomberg monthly survey of economists, the annual core Personal Consumption Expenditure (PCE) price Index is expected to rise by an average of 2.5% next year. This prediction for this favored inflation Indicator of the Federal Reserve is higher than the 2.3% in last month's survey.

Although economists expect the Federal Reserve to cut rates for the third consecutive meeting on Wednesday, they now anticipate that policymakers will implement only three more rate cuts in 2025, each by 25 basis points, during the meetings in March, June, and September. By the end of 2025, the Federal funds rate is expected to be in the 3.5%-3.75% Range.

"Tariffs are a major concern," said James Knightley, Chief International Economist at ING Groep, although some factors will help mitigate the impact, including alternatives to some U.S.-made products and a strong dollar.

"Nonetheless, the living standards of American Consumers will be under pressure, and U.S. exporters will also suffer from retaliatory measures. Therefore, an environment of rising inflation and slowing growth seems possible," the economist stated.

While recent business surveys have shown a significant increase in optimism surrounding policies of elected President Donald Trump, including a reduction in regulatory burdens, higher tariffs and other factors such as tax cuts to stimulate demand may keep inflation elevated.

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The latest survey of 83 economists conducted by Bloomberg from December 11 to 16 also showed an upward revision in expectations for import growth in the first quarter, indicating that some companies expect to stock up before the tariff increases, and strikes may occur at eastern and Gulf Coast ports early next year.

Economists have basically kept their predictions for employment in 2025 stable, estimating an average increase of 0.121 million jobs, down from the previous month's estimate of an average increase of 0.126 million.

Economists have also moderately raised their forecasts for economic growth next year, estimating an average growth of 2.1% in Gross Domestic Product (GDP) for 2025, up from the previous month's forecast of 2%.