3 Fund Managers on United States Fed 0.25% Interest Rate Cut in 2025 September – 1) Franklin Templeton: Markets Already Discounted Significant Further Easing, 2) Schroders: Fed Will Deliver Another 2 Cuts (0.25%) by 2025 & 3) Capital Group: Sentiment Supportive for Bonds and Yields Remain Attractive Around 5%
20th September | Hong Kong
3 fund managers on United States Federal Reserve (Fed) 0.25% interest rate cut in 2025 September: 1) Franklin Templeton: Markets already discounted significant further easing, 2) Schroders: Fed will deliver another 2 cuts (0.25%) by 2025 & 3) Capital Group: Sentiment supportive for bonds and yields remain attractive around 5%. 1) Franklin Templeton Institute Global Investment Strategist Larry Hatheway: “The initial market reaction was subdued across fixed income, equity, and currency markets, suggesting that the move and the statement were largely in the range of expectations. Looking forward, the majority at the FOMC appears to be in a ‘meeting-to-meeting’ stance, preferring to respond to the incoming data rather than signal a clear path ahead for US monetary policy. In an environment of a weakening labor market, yet a resilient consumer and strong capital expenditures – alongside above-target inflation – a cautious and data-dependent Fed appears appropriate. Finally, markets have already discounted significant further Fed easing. Today’s news met expectations, but the challenge for investors is a Fed that is not yet willing to endorse their discounted future path of much lower interest rates.” 2) Schroders Head of Economics David Rees & Senior Economist George Brown: “We now think that the Fed will deliver another two 25 basis points (bps) cuts by the end of 2025. But rates are unlikely to fall further thereafter as robust growth drives a rebound in labour market activity and causes inflation to rise. As such, we continue to believe that market pricing for a terminal rate of below 3% is far too aggressive … … However, we remain concerned that easing policy at this stage of the cycle will prove counterproductive. Indeed, the backdrop is hardly one that screams for stimulus. Equities are at record highs, credit spreads are very tight, and the economy is already running above potential at a time when fiscal policy is set to add more fuel in the months ahead. In this environment, rate cuts are more likely to stoke inflation than real growth. We have nudged our 2026 US GDP growth forecast up only modestly – from 2.2% to 2.3% – but lifted our inflation forecast more meaningfully to a consensus-busting 3.3%. Looking further ahead, there is a material risk inflation becomes unanchored. Structural constraints – especially a shrinking labour supply – mean the economy’s potential growth rate is falling. That raises the odds of a tighter labour market, faster wage growth, and stickier inflation. Long-dated bonds won’t like that, especially given the already troubling debt dynamics. Globally, stronger US demand should be a tailwind. With trade risks receding and global manufacturing indicators turning up, we have revised up our ex-US growth forecasts too. But unlike the US, the impulse abroad should skew more towards real growth than inflation. Ironically, despite the Trump administration’s best efforts to re-shore demand, the rest of the world may end up the biggest winners from its stimulus push.” 3) Capital Group Investment Director Manusha Samaraweera: “Today’s rate cut, in the face of a softening economic picture in the U.S., is a sign that the Fed is willing to support the economy despite potentially stubborn inflation. This sentiment should be supportive for bonds. In particular, high-quality credit, such as global investment-grade corporate bonds, stand out as a compelling way to build a defensive ballast in portfolios. Yields remain attractive – around 5% – offering meaningful income potential and a cushion against volatility. Duration is once again proving its worth, providing diversification benefits as the economy slows, though not yet in recession territory, and central banks pivot towards easing … … Despite tight spreads, bottom-up investors can still find selective opportunities – particularly in sectors such as European banks, US electric utilities, and pharmaceuticals. European peripheral banks, for example, are showing improving fundamentals and attractive valuations, making them a standout choice for those seeking resilient yields and capital preservation in today’s market.” In 2025 September, the United States Federal Reserve has decreased the key central bank Fed interest rate (17/9/25) by 0.25% to 4% to 4.25% range, targeting inflation rate at 2%. United States FOMC: “Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen. In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent.”
“ 3 Fund Managers on United States Fed 0.25% Interest Rate Cut in 2025 September – 1) Franklin Templeton: Markets Already Discounted Significant Further Easing, 2) Schroders: Fed Will Deliver Another 2 Cuts (0.25%) by 2025 & 3) Capital Group: Sentiment Supportive for Bonds and Yields Remain Attractive Around 5% “
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3 Fund Managers on United States Fed 0.25% Interest Rate Cut in 2025 September – 1) Franklin Templeton: Markets Already Discounted Significant Further Easing, 2) Schroders: Fed Will Deliver Another 2 Cuts (0.25%) by 2025 & 3) Capital Group: Sentiment Supportive for Bonds and Yields Remain Attractive Around 5%
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