Allianz Investment: The Federal Reserve may pause its rate cuts earlier in the first half of 25, with policy rates expected to be maintained at 4%.

An investment article published by Allianz stated that with Trump returning to the White House, the US economy and markets are bound to undergo significant changes. The new government may have the opportunity to introduce more fiscal stimulus measures and relax regulations, which could help promote economic growth and make the US economy surpass other developed economies by 2025. However, loose fiscal policies could lead to a rise in inflation. In view of this, the bank believes that the Federal Reserve may pause interest rate cuts earlier in the first half of 2025, and policy rates may remain around 4%. According to Allianz's latest market outlook, Trump's return to the presidency coincides with a global scenario where economies, inflation, and interest rate trends are diverging. It is expected that the divergence in economic conditions among countries will intensify in 2025. Based on the latest global macro data, economic growth is picking up, but the bank remains cautious about the outlook. In Europe, factors such as political paralysis, weak productivity growth, and subdued consumer confidence may mean another year of mediocre growth for the Eurozone. As the European Central Bank gradually guides deposit rates to below the neutral level of 1.75% over the next few quarters, Allianz Investment expects the UK economy to record mild growth in 2025, allowing the Bank of England to gradually cut interest rates every quarter. In Asia, Allianz Investment estimates that the Chinese authorities may introduce more monetary and fiscal stimulus measures, but not the large-scale "rocket-style" package that the market is anticipating. Likewise, Japan's stimulus package of up to $250 billion is expected to boost the local economy. In addition, the bank expects the Bank of Japan to gradually raise its policy rate to at least 1% by 2025.