04:31 PM EDT, 10/16/2025 (MT Newswires) -- The Federal Reserve is not expected to drastically cut rates by year end due to the fact that the US economy remains on a solid growth trajectory and inflation remains above its 2% target, Stifel Financial Chief Economist Lindsey Piegza said Thursday.

"Despite the Fed's willingness to make that insurance-style cut in September, a solid growth profile coupled with still-elevated inflation will presumably limit the broader downside potential for rates, likely resulting in just one additional 25-basis-point cut by year end and furthermore over the next six months," Piegza said during a conference presentation.

The government shutdown and the resulting suspension of economic data releases is making the Fed's job more difficult, Piegza said. Fed officials are unable to get the latest information on economic conditions, which she said could act as an additional headwind against rate cuts.

"Amid already difficult conditions, now with this lack of economic data to gauge or adequately assess the economy, the committee is more likely to remain on hold, or at least should remain on hold, waiting for additional information before potentially compounding a policy error with a second-round rate cut if it's unwarranted by the evolution of inflation and hiring conditions," she said.

Tariff-induced inflation has surfaced over the past year but not to the degree that many economic observers had initially feared thanks in part to a relatively muted pass-through rate of the higher prices from companies to consumers. Still, that could change, Piegza said.

"Many firms initially chose to shield consumers from higher prices either by stocking up on inventories or by simply absorbing part, or in some cases, most of those higher costs into the bottom line at the expense of higher margin," she said. "But at this point, many companies are now running out of options, with inventories dwindling and margins compressed, raising the risk of additional cost pass-through to end users, potentially resulting in further upward pressure on consumer inflation in the near term."