🔥Fed Rate Cuts Prediction ! 2025 💡
Franklin Templeton anticipates that the Federal Reserve may implement one or two interest rate cuts in 2025. This projection aligns with recent developments indicating a more cautious approach by the Fed. Notably, the median expectation has shifted to just 0.5 percentage points of cuts in 2025, down from a full 1% projected earlier.
Additionally, the yield on the U.S. 10-year Treasury bond is approaching 5%, a level not seen since April. This increase is attracting investor attention, as higher yields can make bonds more appealing compared to stocks.
Recent economic data has influenced these expectations. In December 2024, U.S. job growth unexpectedly surged, with nonfarm payrolls increasing by 256,000 jobs, significantly surpassing the forecast of 160,000. The unemployment rate decreased to 4.1% from 4.2% in November. This robust performance suggests that the labor market is strong, causing the Federal Reserve to maintain its cautious approach to interest rate cuts in 2025.
Investors are now closely monitoring upcoming inflation reports, as higher-than-expected inflation could further influence the Fed's policy decisions. The December consumer price index (CPI) report, scheduled for release on January 15, is particularly anticipated.
In summary, while Franklin Templeton foresees potential rate cuts in 2025, recent economic indicators and the Fed's cautious stance suggest that any reductions may be limited, with only one or two cuts likely.
