Will The Fed Cut Rates? Standard Chartered Says Yes, Despite Fiscal Deficit, Stagflation Talk

• Standard Chartered’s Foo Ken Yap predicts a US Federal Reserve interest rate cut despite fiscal concerns.
• Morgan Stanley offers a contrasting view, warning of stagflation and recession for US economy in 2025.
• Despite uncertainty, Bitcoin (BTC) hits new ATH as investors seek alternative havens like gold.

Senior Investment Strategist at Standard Chartered Bank, Foo Ken Yap, has predicted that the US Federal Reserve will cut interest rates despite expectations to the contrary from various market quarters. According to Yap, the Fed will likely take the unexpected action to cushion the bond market impact and lend support to the overall economic growth.

The research strategist acknowledged the escalating concerns over the US fiscal deficit. However, he predicted that the US 10-year Treasury bond yield would decrease from  4.59% to 4% – 4.25%. Alongside this, Yap and his team at Standard Chartered Bank maintain an optimistic stance on US stocks.

Standard Chartered’s Yap: Fed to Cut Rates, Boosting Bonds and Stocks

The bank’s research reflects its belief that significant corporate investment and resilient earnings expectations will continue to support the market. In the meantime, Standard Chartered Bank acknowledged gold’s value and role as a hedge against inflation and risks associated with recession. 

Related: BULLISH: Tariff Effect as Countries Start Cutting Interest Rates

Yap’s prediction adds to the growing analysis and experts’ projections about the potential outcomes for the US economy in 2025. Renowned Wall Street firm Morgan Stanley considers 2025 a tough year for the US economy after concerns about stagflation, recession, and the tariff debate caused a “whipsaw” in the stock market.

Morgan Stanley Paints Different Picture: Stagflation, Recession Risks Loom in 2025

Several narratives have emerged since the beginning of the year following heightened uncertainties about the Trump administration’s final decision on various economic matters. However, Morgan Stanley analysts think the coast is unclear, and fiscal worries persist in the US.

Related: BTC’s Price Rises as Market Reacts to the Fed Interest Rate Hike

According to analysts, the job market has weakened, causing a slowdown in economic activities. Tariffs have come to stay, a development that the analysts believe would add more inflation pressure, potentially forcing the Federal Reserve into a corner.

Gold, Bitcoin Gain Appeal As Investors Seek Havens

Typically, investors seek havens in alternative assets like gold and Bitcoin whenever the economic atmosphere becomes unclear. Experts believe a capital rotation into Bitcoin and other digital assets has already kicked off. 

This shift is gaining particular attention especially since BTC resumed its rally from the beginning of April and notably achieved a new all-time high of $111,888 just a few hours before the filing of this report on May 22, 2025. This move highlights growing investor appetite for assets perceived as hedges in an unclear economic environment.