A recent Bank of America survey of global fund managers found that a majority of investors predict the Fed will cut interest rates in 2025.
According to the survey conducted in February, 77% of fund managers expect a rate cut, while 46% predict two cuts, 27% one cut and 4% three cuts. Meanwhile, 19% of respondents believe interest rates will remain unchanged, while only 1% predict a rate hike.
The rate cut expectations come amid ongoing inflationary pressures. January inflation figures that beat estimates led to a sharp decline in stock markets and a rise in borrowing costs. These market moves reflect concerns that the Fed could keep rates high for longer than previously expected.
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Bill Adams, chief economist at Comerica Bank, said the latest inflation data supports the view that underlying price pressures remain a problem. “The Fed will view the January high inflation data as confirmation that price pressures continue to bubble beneath the surface of the economy,” Adams said in a note to clients. “This would reinforce the Fed’s intention to at least slow and possibly even end rate cuts in 2025.”
RSM US chief economist Joseph Brusuelas shared a similar view, revising his forecast to a single rate cut in December.
*This is not investment advice.
Continue Reading: Bank of America Surveyed Fund Managers: What Will US Interest Rates Be in 2025? When is the Cut?
