Global financial advisory firm’s CEO shares insights into what may be ahead
All eyes may be on the Bank of Canada today (September 4) as it announces its interest rate decision, but the investing world is anticipating what may happen later in the month south of the border.
Growing anticipation of a long-awaited rate cut by the Fed will be followed by a period of major opportunity for investors according to the chief executive of global financial advisory firm deVere.
Nigel Green’s bullish call to action is based on the prospect of a sequence of US interest rate cuts from this month through to the early months of 2025. It would at last end a long run of rates remaining at their highest rate for two decades.
“After a historic period of aggressive interest rate hikes that began in March 2022 to curb pandemic-driven inflation, the Fed is expected to start cutting rates, with one reduction anticipated this month and four more expected in 2025,” Green explains. “For investors, this potential rate-cutting cycle is expected to signal the beginning of a new market dynamic—one that offers opportunities for growth and expansion.”
A reduction in rates will also have an impact on the US dollar which has been strong during the elevated rates era, weakening American firm’s export potential and impacting global trade balances; and will cut the cost of borrowing to enable firms to increase investment and expansion.
“Historically, rate cuts have been a powerful catalyst for economic growth, fueling expansion across key sectors such as tech, manufacturing, and real estate,” said Green. “Lower borrowing costs make it easier for companies to finance projects and drive innovation, while consumers benefit from more favourable credit conditions. In this environment, businesses often find themselves in a better position to expand, hire more workers, and generate profits, all of which can lead to rising stock prices and a bullish market.”
Green added that as the dollar softens, international markets may become more attractive, offering the chance for higher returns on foreign investments.
“Exporters, particularly in sectors like manufacturing and agriculture, stand to benefit as US goods become more competitive in the global market,” he said.
Investor action
But what do investors need to do now to be well positioned to seize the opportunities that could be ahead?
“The key is to act strategically—by carefully reassessing your current holdings, identifying areas of opportunity, and making informed decisions based on expert insights,” said Green.
Equity markets are expected to gain from a lower rate environment.
“Companies that thrive in a low-rate environment—those with strong balance sheets, innovative products, and robust growth potential—are poised to benefit the most,” said Green.
But it’s not all about equities.
“Bond markets can also become more appealing as rates fall, particularly for those looking for yield in a lower interest rate environment,” he said. “Bonds that were issued at higher interest rates could become more valuable, and new bond issues may offer attractive terms for investors looking to diversify their portfolios.”
Overall, the potential for investors to gain from the Fed’s easing of monetary policy relies on taking the necessary preparatory action now.
“As the Fed transitions from rate hikes to rate cuts, markets are entering a new phase. Don’t wait to adjust your strategy—position yourself to thrive in the months and years ahead. The time to act is now,” concludes the deVere CEO.
