Daly Investment Fed Rate Cut Update 2025!
Daly Investment Management we wanted to take some time and address the Fed Rate cuts for 2025. We know every client has different goals and risk tolerance and nothing is one size fits all but below are some insights into how Daly Investment Management sees Fed rate cuts in 2025.
The Fed did not give a rate cut in July. Most people predicted that it was going to happen. I know the Fed has been getting some pressure on this. I think we're getting closer to a rate cut now. September is up in the air still, I believe. We saw a little bit of an increase with inflation. So, you know, that could give them some ammunition to say we're going to continue to pause. But you're hearing now, week to week, more and more economists, and not just the administration, but more and more economists say, the Fed, should be cutting interest rates.
International countries, governments across the globe. They've been cutting all year. And so, I think we're going to see some rate cuts. The expectation is still probably two rate cuts this year. That's decreased a little bit with the increased inflation number that we saw, which was a tenth of a percent higher than expectation. So, nothing significant, but I do think September's potentially on the table for the next rate cut.
We should have a rate cut. I think the pressure of recession coming is increased from where it was a few months ago. We've talked about how; The Fed is kind of late to the game. It's not new, Economists have been saying this for 10, 20, 30 years, and historically the Fed has shown that this is why they go through these periods of significant rate cuts, because they're late to the game. And it's nothing on purpose.
They're looking at the data as it comes. They don't have a crystal ball to predict the future, so they're trying to do their best job, and it's a very hard job to do. You're trying to figure out where the economy is, and you're using back data to kind of forecast that, which a lot of times doesn't work. But if they're, target is 3%. Sitting at this level is probably a little high. I think we should start to see some rate cuts this year, but time will tell.
Federal Reserve Rate Cut Outlook Daly Investment Management
Current Status and Recent Decisions
- No rate cut implemented in July.
- September remains uncertain as the timing for a potential rate cut.
Inflation Data and Implications
- Recent inflation reading came in 0.1% above expectations.
- The slight upside surprise provides justification for continued pause, but not a definitive barrier to cutting.
Daly Investment Management Market and Expert Sentiment
- Growing weekly momentum among economists advocating for rate cuts.
- Pressure on the Fed is not only from the administration; a broader base of economists now call for easing.
- International context: multiple governments globally have been cutting rates throughout the year.
Daly Investment Management Expectations for 2025 Policy Path
- Baseline expectation remains two rate cuts this year.
- Probability of two cuts has diminished somewhat due to the modest inflation uptick.
- September is identified as a plausible window for the next rate cut.
Economic Risk Assessment
- Recession risk assessed as higher than a few months ago.
- Assessment supports the case for initiating rate cuts to mitigate downside risks.
Daly Investment Management Structural and Historical Perspective on Fed Behavior
- The Fed is characterized as “late to the game” historically, often leading to periods of significant rate cuts after delays.
- Decision-making constraints:
- Reliance on backward-looking data to forecast forward conditions.
- Absence of perfect foresight (“no crystal ball”), making timing inherently difficult.
Policy Target and Positioning
- Inflation target referenced as 3%.
- Current stance viewed as “a little high” relative to target, reinforcing the case for rate cuts within the year.
- Daly Investment Management viewpoint: rate cuts should begin this year; September considered viable, with acknowledgment that outcomes depend on incoming data.
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