Schroders: The Federal Reserve may end interest rate cuts in 2025 and could enter a rate hike cycle in 2026
Andy An, Deputy General Manager of Schroders Fund Management (China), expects that 2025 is likely to mark the end of the Federal Reserve's interest rate cut cycle, with a potential shift to an interest rate hike cycle in 2026. This mainly depends on the strong fundamentals of the U.S. economy itself. While a weak dollar aids the medium-term development of the U.S. economy, inflation expectations remain one of the key factors determining the Federal Reserve's short-term policy direction. Based on the current U.S. economic conditions, corporate earnings, and inflation expectations, Schroders believes that 2025 is likely to witness the bottom of this round of interest rate cuts. Additionally, if Trump returns to power, changes in U.S. policy could impact the global economy and geopolitical landscape, which still carries considerable uncertainty, and the market may not have fully digested the related risks. However, from the short-term trends of U.S. Treasury bonds and the dollar, the market's expectations for U.S. economic growth and inflation remain relatively high, and there may be opportunities for a correction in the future
According to the Zhitong Finance APP, An Yun, Deputy General Manager of Schroders Fund Management (China), expects that 2025 is likely to mark the end of the Federal Reserve's interest rate cut cycle, while 2026 may enter a rate hike cycle. This mainly depends on the strong fundamentals of the U.S. economy itself.
Although a weak dollar helps the mid-term development of the U.S. economy, inflation expectations remain one of the key factors determining the Federal Reserve's short-term policy direction. Based on the current state of the U.S. economy, corporate earnings, and inflation expectations, Schroders believes that 2025 is likely to witness the bottom of this round of interest rate cuts.
In addition, if Trump returns to power, changes in U.S. policy may affect the global economy and geopolitical landscape, which still carries considerable uncertainty, and the market may not have fully digested the related risks. However, from the short-term trends of U.S. Treasury bonds and the dollar, the market's expectations for U.S. economic growth and inflation remain relatively high, and there may be opportunities for correction in the future