CICC Securities has released a new report stating that the Federal Reserve is expected to cut interest rates three times in 2025. This may significantly impact stock and cryptocurrency markets.
Predictions on Fed Rate Cuts
CICC Securities forecasts that Federal Reserve Chairman Jerome Powell will announce a plan to cut interest rates by 25 basis points three times in 2025 during his speech at the Jackson Hole Symposium. This prediction aligns with prior expectations but may differ from the broader market assessment. Such reductions are expected to reshape U.S. equity markets, particularly affecting rate-sensitive sectors like Russell 2000 and NASDAQ Biotechnology.
Asset Reactions to Rate Changes
Similar rate adjustments in 2024 saw rate-sensitive U.S. equities surge. Current changes may lead asset managers to rethink their portfolios. Analysts suggest that dovish monetary policy could drive commodity prices, such as gold, although geopolitical stability may counter these trends.
Potential Growth in Cryptocurrencies
According to Coincu analysts, the expected rate cuts may stimulate growth in decentralized finance (DeFi) protocols by increasing liquidity. Historically, such maneuvers have led to increased capital flows into speculative assets, benefiting tokens like ETH and BTC that thrive in lower-rate environments.
The anticipated Federal Reserve rate cuts in 2025 may significantly impact the U.S. equity markets and attract investor interest in cryptocurrencies. It will be interesting to see how this policy affects asset allocation and overall market dynamics.
