A decrease in interest rates is expected to support economic growth in the US and Europe, without significantly boosting demand or reigniting inflation, according to J.P. Morgan Private Bank.
The financial firm has released the latest Global Investment Outlook, Building on Strength, which defines the pivotal themes poised to shape market dynamics in the upcoming year.
“It was a year of exceptional market performance, characterised by a decline in inflation, robust GDP growth, strong corporate profits, and easing monetary policy,” said Grace Peters, Global Head of Investment Strategy at J.P. Morgan Private Bank.
Following a year marked by elections, the bank’s experts are now advising investors to shift their focus from votes to policy impact on the economic and investment landscape.
“Latin America was at the forefront of the global easing cycle, which has helped sustain growth and economic activity across the region. However, ‘fiscal activism’ from governments can de-anchor inflation expectations and derail monetary efforts, posing a risk to the expansionary cycle.” said Nur Cristiani, Latin America Head of Investment Strategy.
Looking ahead to 2025, investors are set to capitalise on growing trends, including accelerating capital investment, and transformative themes like artificial intelligence.
“In the U.S., bond market pricing implies an easing cycle that ends in the first quarter of 2026 with the policy rate near 3.5%,” said Jacob Manoukian, US Head of Investment Strategy. “This provides a supportive environment for risk assets, benefiting sectors like housing, commercial real estate, productivity, while also encouraging a nascent revival in dealmaking.”
Currently, open-ended evergreen alternative funds are rising in popularity. The report stressed how 50% of the bank’s alternative commitments in 2024 were in evergreen fund structures, a 3x increase compared to the previous year.
Moreover, capital investment is set to be a key driver of growth, particularly in relation to be three global trends: artificial intelligence, power infrastructure and security.
“Investment innovation sometimes comes in waves; we’re hopeful that 2025 will see a surge of innovation as the industry explores new frontiers including evergreen alternatives, sports, space and urban development.” said Thomas Kennedy, Chief Investment Strategist. “These pioneering investment strategies and opportunities, while not core to every portfolio, offer potential for growth and diversification in a rapidly changing world.”