CIO Notebook: Powell Plays The Middle As Fed Cuts Rates
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Neuberger Berman3.24K FollowersFollow5ShareSavePlay(9min)CommentsSummaryAs widely expected, the Federal Open Market Committee (“FOMC”) announced that it lowered the fed funds target rate by 25 basis points to 3.50% to 3.75% following their December meeting.What was clear from the press conference is that the Fed is at an inflection point.We remain constructive on equities, favoring cyclicals and quality growth. Richard Drury/DigitalVision via Getty Images By Shannon L. Saccocia, CFA The Fed is at an inflection point as risk‑management cuts wind down; although dispersion within the Committee may introduce uncertainty, the likely replacement of Chair Powell in May 2026 could alsoThis article was written byNeuberger Berman3.24K FollowersFollowNeuberger Berman was founded in 1939 to do one thing: deliver compelling investment results for our clients over the long term. This remains our singular purpose today, driven by a culture rooted in deep fundamental research, the pursuit of investment insight and continuous innovation on behalf of clients, and facilitated by the free exchange of ideas across the organization. From offices in 39 cities across 26 countries, Neuberger Berman manages a range of equity, fixed income, private equity and hedge fund strategies on behalf of institutions, advisors and individual investors worldwide. With 763 investment professionals and 2,850 employees in total, Neuberger Berman has built a diverse team of individuals united in their commitment to client outcomes and investment excellence. Our culture has afforded us enviable retention rates among our senior investment staff, and has earned us citations as first or second (among those with 1,000 or more employees) in the Pensions & Investments “Best Places to Work in Money Management” survey each year since 2014. As a private, independent, employee-owned investment manager, Neuberger Berman is structurally aligned with the long-term interests of our clients. We have no external parent or public shareholders to serve, nor other lines of business to distract us from our core mission. And with our employees and their families invested alongside our clients—plus 100% of employee deferred cash compensation directly linked to team and firm strategies—we are truly in this together. The firm has $538 billion in assets under management as of June 30, 2025. For more information, please visit our website at www.nb.com.For important disclosures: https://www.nb.com/disclosure-global-communicationsQuick InsightsHow does the Fed's evolving stance impact equity positioning for 2026?With the Fed leaning toward easing and inflation moderating, we favor cyclicals, quality growth, and broader equity exposure, including small cap and ex-U.S. markets.What is the recommended fixed income strategy given the Fed's current trajectory?We suggest moving out of cash and ultra-short bonds, extending duration, and selectively adding credit to capture potential upside as rates stabilize or decline.How might Fed leadership changes in 2026 affect monetary policy and risk assets?The likely replacement of Chair Powell in May 2026 could introduce a more dovish tilt, supporting further easing and potentially benefiting growth and risk assets in the back half of the year.Recommended For You