Normalization of interest rates

Normalization of Interest Rates is another key theme in our Q3 house-view. After a prolonged period of historically low interest rates, central banks worldwide actively raised rates to combat persistent inflation, bringing policy rates closer to their long-term averages and returning interest rates to historical norms. Policymakers continue to strike a delicate balance between taming inflation and supporting sustainable growth, closely monitoring the lagged effects of their actions. In the U.S., the Fed has kept the federal funds rate at its highest level in 23 years, reflecting a cautious approach to stabilizing inflation, which remains above the desired target.  Meanwhile, the ECB has made its first rate cut in five years, lowering key rates by 25 basis points to address slowing inflation and economic pressures. Investors must be prepared for a "higher for longer" environment.