What is your expectation of FED lowest possible rate in 2025? I asking because there was a high expectation of FED rate cut in September with growing unemployment and inflation going down. Now we have:
- Unemployment rate declining in September is 4.1% (4.3% in July and 4.2% in August)
- Oil prices somewhat elevated in September and it is not clear where they will go from here, as they could decline if exporters increase production.
- Larger war could cause more inflation pressure because of potential global logistic issues.
This makes me believe that it would be hard to motivate FED to decrease rates much. Would you expect rate to go below 3% in 2025? I not why would it happen.
If the assumption above is true, then companies benefiting on higher rates will still have significant advantage. Among them are payment systems (PAYO, WISE.LSE). While PAYO have core team located in Israel, their computing power is outside. The WISE.LSE seems more secure as they distributed among safer areas.
From other point retail construction heavily dependent on low rates. However the 2024 proven that those with strong balance sheet, low debt and good management have not suffered much of losses. There are few good companies in industry (like LEN or MHO) with PE less than 15. Taking into consideration the inflation would stay within 2-3% such PE seems good enough to consider them as investment, even though risk of FED rate could stay quite elevated is high.
Would love to hear opinions on FED rates or some related interesting companies examples.
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