<Research>HSBC Research Envisions Fed to Cut Rates by 25 bps Each in Jun/ Sep/ Dec 2025

2025/05/08 07:02 GMT

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The Fed decided to keep interest rates unchanged, noting that uncertainty over the economic outlook "has increased further", according to a report issued from HSBC Global Research.

Meanwhile, tariffs may add complexity to policy decisions as the path of interest rates may diverge depending on risks of rising unemployment or inflation.

Related NewsHTSC: STANCHART Has Earnings Growth Potential & Quality Shareholder Returns; Tariff Impact Expected to Be Manageable Overall
HSBC Global Research upheld a neutral view on US Treasuries, believing that the USD is delinked from interest rate differentials and risky assets may lose their recent resilience.

In HSBC Global Research's estimate, US GDP growth will slow to 1% in 4Q25, while the unemployment rate will rise to nearly 5% by year-end. Even if the growth-inflation trade-off deteriorates in the future, the broker still predicts rate cuts of a maximum of 75 bps through 2025 and 2026, with the Fed forecasted to cut rates by 25 bps each in June, September, and December this year.

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