JPMorgan Private Bank expects global monetary policy easing to drive economic growth in 2025, with US interest rates potentially falling to 3.5 per cent by early 2026, according to its latest investment outlook released Tuesday.
The wealth management arm, which oversees more than $2.8 trillion in client assets, anticipates the continuation of rate cuts will support risk assets without reigniting inflation, particularly benefiting sectors such as housing and commercial real estate.
“It was a year of exceptional market performance, characterised by a decline in inflation, robust GDP growth, strong corporate profits, and easing monetary policy,” Grace Peters, global head of investment strategy at JPMorgan Private Bank, said in the outlook report titled “Building on Strength.”
The bank identified capital investment as a key megatrend for 2025, driven by artificial intelligence, power infrastructure, and security needs. This investment surge is expected to be particularly pronounced in the power sector, fuelled by US manufacturing reindustrialisation and increasing demand from data centres.
“We anticipate a surge in capital investment in the power sector, driven by the reindustrialisation of US manufacturing, increased electrification in clean energy solutions, and the rising demand from data centres,” said Alex Wolf, Asia head of investment strategy at the bank.
Despite concerns about European productivity, the bank sees opportunities in the region’s largest companies. The top 50 European firms generate approximately 60 per cent of their revenues outside Europe, making them genuine global players, according to Erik Wytenus, head of investment strategy for Europe, Middle East, and Africa.
The outlook also highlighted a significant shift in alternative investments, with the bank reporting that half of its alternative commitments in 2024 were in evergreen fund structures—a threefold increase from the previous year.
“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.
The bank warned investors to focus more on policy impact than election outcomes, particularly as anti-establishment movements gain momentum globally. This political shift could increase volatility and highlights the need for resilient investment portfolios.
Latin America’s experience with early rate cuts has provided insights into potential risks, according to Nur Cristiani, Latin America head of investment strategy. She cautioned that “fiscal activism” from governments could destabilise inflation expectations and compromise monetary policy effectiveness.
The outlook comes as investors seek to build upon strong market performance in 2024, with JPMorgan Private Bank emphasising portfolio resilience through income generation and diversification to protect against unexpected market shocks.
Jacob Manoukian, US head of investment strategy, noted that current bond market pricing suggests an easing cycle concluding in the first quarter of 2026, with the policy rate approaching 3.5 per cent. This environment, he argued, should provide support for risk assets and potentially revive dealmaking activity.
The bank’s strategy encompasses both traditional and alternative investments, though it cautions that alternative strategies carry higher risks and should only be considered by sophisticated investors capable of absorbing potential losses.
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