Pimco’s CIO: The Federal Reserve is expected to cut interest rates twice this year, making short-term US bonds attractive

On January 27th, Marc Seidner, Chief Investment Officer (CIO) of Non Traditional Strategy at Pacific Investment Management Company (PIMCO), stated that the Federal Reserve may cut interest rates more aggressively than market expectations, making shorter term US bonds attractive. It is expected that the Federal Reserve will cut interest rates by 25 basis points twice in 2025, possibly in the second half of the year, and there is a possibility of further cuts after that. Our expectation is that the Federal Reserve will ignore tariffs and prevent them from directly affecting policy. We disagree with the market pricing and assumption that Trump’s presidency will definitely push up inflation.