The Berenberg economics team led by Holger Schmieding produced this striking chart, showing how interest-rate expectations ...

The rate has stayed above 4% for more than two years as the Fed has aimed to lower inflation by keeping borrowing costs high.

"Markets also have a tendency to overestimate how much the Fed will cut interest rates, so time will tell." Either way, tariffs are a "notable headwind to economic growth," says McBride.