Federal Reserve Anticipated to Cut Rates Thrice in 2025

CICC Securities’ recent research suggests the Federal Reserve will cut interest rates three times this year, indicating potential market shifts in response to Powell’s Jackson Hole speech.

This expectation may influence U.S. equity and global market dynamics, impacting rate-sensitive assets and potentially invigorating risk appetite across various sectors, including cryptocurrency.

CICC Predicts Significant Fed Rate Cuts for 2025

Jerome Powell’s speech at the Jackson Hole Symposium indicates a plan to cut interest rates by 25 basis points three times in 2025. CICC Securities, a prominent Chinese investment bank, believes these actions align with prior expectations but may vary from broader market perspectives.

These rate adjustments will likely reshape the U.S. stock market, with analysts predicting strong impacts on rate-sensitive sectors such as the Russell 2000, S&P 500 Real Estate, and NASDAQ Biotechnology. Powell’s dovish posture is expected to enhance risk appetite in global equity markets.

“We anticipate three cuts of 25bps each in 2025, which aligns with our prior expectations for a dovish Federal Reserve.” — CICC Securities Research Team, CICC Securities.

Asset Managers Pivot in Anticipation of Rate Changes

Did you know? In 2024, a similar rate adjustment saw rate-sensitive U.S. equities surge, setting the stage for potential future patterns in stock and crypto markets.

Market reactions have been significant, with asset managers and investors realigning portfolios. Analysts believe dovish monetary policy will bolster price increases in commodities like gold, although geopolitical stability could counter these trends. In cryptocurrencies, rate cuts historically boost investor interest.

According to Coincu analysts, these rate cuts might boost DeFi protocols by increasing liquidity. Such financial maneuvers historically lead to increased capital flows into speculative assets, benefiting tokens like ETH and BTC, which thrive in lower-rate environments.