As widely expected, the US Federal Reserve, Bank of England and European Central Bank all cut policy rates in Q4 2024.
A new administration, the debt ceiling reinstatement and evolving financial conditions are a focus in the US, while a repricing of expectations and challenging outlook are what we’re evaluating across the UK and Europe.
The market digested the Fed’s 100 basis points of rate cuts in 2024 without extreme volatility, though we expect potential interest rate volatility as markets navigate expectations in the US and abroad.
On December 18, the Federal Reserve (Fed) lowered short-term interest rates by 25 basis points, resulting in the current federal funds rate range of 4.25%-4.50%. There was only one dissenter among the Fed voters, signifying the collective desire to move out of restrictive policy and normalize rates to achieve the Fed’s 2% average inflation target. The outcome of the U.S. presidential election, along with the Republican sweep of the House and Senate, led markets to speculate that new policies could perpetuate more inflation in the future. The median dot plot currently implies two 25 basis point cuts in 2025, versus four 25 basis point cuts priced in during the third quarter of 2024.
US money market fund industry assets ended 2024 at a record high of USD6.85 trillion. Although the US Treasury yield curve has largely dis-inverted, elevated short-term yields have remained attractive to cash investors and have been a driving factor in the continued growth in money market fund assets.
With the Federal Reserve lowering interest rates, here is what that means for liquidity investors and how to manage liquidity in a declining interest rate environment.
In this discussion we review the factors that influenced the sharp moves in the repo market in 2019, and explore the possibility of a reoccurrence.
How are treasurers managing short-term investments while preparing for the future? Find out in the 2024 AFP Liquidity Survey, sponsored by Invesco Global Liquidity.
NA4136484
This link takes you to a site not affiliated with Invesco. The site is for informational purposes only. Invesco does not guarantee nor take any responsibility for any of the content.
