PGJ - 2025 Investment Outlook: Soft Landing And What Comes Next

2025-01-18 12:30:00 ET

Summary

• Lower interest rates may make risk assets more attractive as central banks bring down inflation without a recession.
• A policy mistake could cause global growth to undershoot, but central banks would likely cut rates to counteract it.
• Global growth could be stronger than expected with falling inflation and rate cuts setting up a global 'Goldilocks' environment.

Our 2025 investment outlook gives a likely base case scenario for the US and other economies around the world. Clients might also anticipate two alternate scenarios - an upside and a downside - along with swing factors that could alter expectations. What are the asset implications for these three scenarios?

This outlook is the product of much analysis and thought from key investment professionals and thought leaders at Invesco. It's always a very collaborative effort, with much disagreement and discourse. At Invesco, we value diversity of views, and believe it ultimately strengthens our outcomes.

Our base case for markets and economies in 2025

After a steep climb to restrictive rates to curtail rapidly rising prices, most central banks all but declared victory over inflation in 2024. Yet, many of the world's major economies have been showing signs of slowing, with pockets of weakness such as slipping Eurozone Purchasing Managers' Indexes , rising unemployment rates, and faltering consumer confidence pushing central banks to cut interest rates in the latter half of the year....

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