Franklin Templeton’s Fixed Income team suggests investors could re-enter the market and utilise cash holdings as the Federal Reserve contemplates a shift in policy. The team notes considerable uncertainty regarding future direction, highlighting divisions within the Federal Open Market Committee (FOMC) as indicated by the Fed’s ‘dot plot’ forecast. Franklin Templeton is a global investment management organisation offering various investment solutions. The firm operates with the goal of delivering clients better outcomes through investment management expertise.
Kevin Calbaro, senior product specialist at Franklin Templeton, stated that expectations of deep interest-rate cuts following recent easing moves might be excessive relative to the Fed’s outlook and current economic conditions. He believes the Fed will likely maintain its current position at the December FOMC meeting and potentially implement a single rate cut in the first quarter of 2026, assuming no significant downturn in the US labour market.
Calbaro indicated that a Fed rate hike appears unlikely in the present circumstances. Consequently, maintaining funds in cash-like investments, such as money market funds and short-term Treasuries, might become less appealing. The team suggests that now might be an opportune time for some investors to consider reallocating those funds into fixed income markets, potentially benefiting from evolving monetary policy.
