JPMorgan's Barry Sees Fed Easing 75 Bps in 2025

JPMorgan's head of global rates strategy, Jay Barry, expects the Federal Reserve to ease monetary policy by 75 basis points (bps) in 2025, according to a report by Bloomberg. This projection comes as the Fed is set to raise interest rates in December, with officials indicating they now expect to cut rates by just a half point in 2025, down from predicting a full percentage point in their September projections.

Barry's outlook aligns with the Global Investment Strategy team's Outlook 2025 report, which explores 25 considerations to help investors prepare for the coming year. The report highlights five overarching themes: easing global policy, rising capital investment, election impacts, portfolio resilience, and exploration of new frontiers. Barry's expectation of a 75 bps rate cut in 2025 is consistent with the report's focus on easing global policy.



Barry's projection suggests that the Fed may be more cautious in its rate-cutting path in 2025, potentially pausing at or above 4% to better gauge the effects of monetary policy. This cautious approach reflects the uncertainty surrounding the incoming Trump administration's policies and their potential impact on inflation. The Fed's new projections indicate that officials are unsure about the future, with 14 out of 19 penciling in two quarter-point rate cuts or less in 2025.

The Fed's rate cuts are expected to have consequences for debt, savings, auto loans, mortgages, and other forms of borrowing by consumers and businesses. However, with inflation pressures still elevated and concern that President-elect Donald Trump's policies could fuel inflation, the Fed indicated that it's likely to cut rates more gradually in 2025. This could mean that loan rates may barely budge if the Fed sticks with its plan to cut its key short-term rate only twice next year.

In conclusion, JPMorgan's Jay Barry expects the Federal Reserve to ease monetary policy by 75 bps in 2025, reflecting a cautious approach to rate cuts and uncertainty surrounding the incoming Trump administration's policies. The Fed's rate cuts are expected to have consequences for various asset classes and borrowing costs, but the extent of these effects may be limited by the Fed's more cautious approach and the uncertainty surrounding the Trump administration's policies.