The week was dominated by the Fed’s decision to cut the US benchmark rate by 0.25 percentage points, in a move already widely anticipated, but still decisive for market sentiment. The central bank signaled that the next cycle will not be a quick return to zero interest rates. The message continues to be one of caution and the central bank has made it clear that the next steps depend on the evolution of inflation and employment data.
With its focus on 2026, the Fed recognizes that inflation is retreating, but remembers that the neutral rate could be higher than in the past. Investors will have to reconcile this reality with the capital needs of companies, particularly those linked to artificial intelligence.
The reaction of equity markets to the Fed’s decision was balanced and sentiment remains firm. However, less accommodative projections for next year weighed on the more volatile technology sectors, which are coming from a prolonged period of appreciation. High multiples become more fragile in a context of gradually decreasing discount rates, and after such a strong year 2025 for the technology sector, investors may look for better opportunities in other segments.