The Federal Reserve cut rates by 25 basis points but signaled a more cautious path ahead, projecting just one cut in 2025. The policy statement leaned hawkish with upgraded growth forecasts, while Chair Powell maintained a neutral tone. What does this mean for your portfolio? Discover where we see the biggest potential in today’s rate environment.
Key takeaways
- The Fed cut interest rates by 25 basis points, with the target policy rate range now at 3.50%-3.75%.
- The policy statement leaned hawkish, adding a qualifier about “the extent” of future changes in rates and boosting the GDP growth outlook. It also dropped a reference to “low” unemployment.
- The updated Summary of Economic Projections showed one rate cut expected next year, the same as the previous edition.
- Chair Powell struck a neutral tone in his press conference, downplaying the near-term outlook for rate cuts but continuing to signal that risks are skewed to the downside.
- We favor asset classes that may benefit from Fed rate cuts, including shorter-duration segments in fixed income, small cap equities and global real estate.
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