3 Questions with Cedric Chehab: Tariffs, Central Banks, and Geopolitics in Focus

Key takeaways from Fitch Group, Inc. ’s All Angles Forum 2025 on inflation trajectories, the end-game for easing cycles, and Asia’s evolving risk landscape featuring Cedric Chehab , Chief Economist at BMI Country Risk & Industry Analysis .

At Fitch Group’s All Angles Forum 2025, Cedric Chehab, Chief Economist at BMI, shared timely insights on how shifting tariff policies, the late stage of global easing cycles, and evolving geopolitical dynamics are shaping the macro and credit outlook. Below, we distill three pressing questions investors are asking—and what to watch next.

Q1. How are shifting tariff policies impacting inflation and growth? What should market players watch?

Tariffs are already starting to feed through to certain goods prices in the US, and we expect inflation to continue to rise, hitting about 3.3% by year end. Consensus is that the US Fed will look through an increase in inflation as a one-off tariff shock and will continue cutting interest rates to about 3.00% by end 2026. However, any upside surprise to inflation would likely see a sharp shift in interest rate expectations and could lead to another growth scare.

Q2. As easing cycles wind down, what’s next for central banks like the Fed? How could this shape credit markets globally?

Most major central banks have been easing policy since 2024, and we believe that many will conclude their easing cycles over the course of 2026. Some like the European Central Bank have already likely finished cutting for this cycle. This means that the bulk of monetary easing is now behind us, but the good news is that the lagged impact of cuts will continue to feed through to growth over the coming quarters.

Q3. How are geopolitics and supply chain shifts reshaping risk, especially in Asia?

Our interactive poll at the conference revealed that the single largest risk investors were focused on was geopolitics, and in particular trade policy. It has been our view that peak trade uncertainty is likely behind us, as companies now expect an average effective tariff rate of around 15-17% and can start to adjust their capex plans. However, while trade uncertainty has diminished slightly, other domestic and geopolitical risks remain elevated, including, GenZ protests, the potential escalation in tensions between Russia and Ukraine, as well as a breakdown in the ceasefire in Gaza.

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