Standard Chartered’s investment strategists expect the Federal Reserve to raise interest rates twice more before mid-2027, while maintaining a preference for equities over other asset classes in their global portfolio outlook.
Standard Chartered’s wealth management team is projecting at least two additional Federal Reserve rate increases before the middle of 2027, a view that places the bank in a more hawkish camp than many of its peers. The forecast reflects continued concern that inflation pressures in the United States have not fully retreated to the Fed’s 2% target, keeping the door open for further monetary tightening even as the central bank has paused in recent months.
Despite that outlook for higher borrowing costs ahead, the bank is keeping an overweight position on equities — meaning it is recommending that investors hold more stocks than a standard benchmark portfolio would suggest. That stance may seem counterintuitive at first glance, since higher interest rates typically weigh on stock valuations by making bonds more attractive and raising the cost of capital for businesses. But strategists who hold this view often argue that rate hikes in a growing economy can be accompanied by strong corporate earnings, which can offset valuation pressure.
The Federal Reserve has kept its benchmark rate elevated after an aggressive tightening cycle that began in 2022, aimed at bringing inflation down from four-decade highs. Whether the central bank has truly finished raising rates — or has more work to do — remains one of the most debated questions in global markets. Fed officials themselves have repeatedly stressed that future decisions will depend on incoming economic data, particularly on inflation and the labor market.
Forecasts from major banks vary widely on where the Fed goes from here. Some expect rate cuts to begin within the next year, while others, like Standard Chartered in this outlook, see the balance of risks tilted toward further hikes. Those differing views have kept bond markets volatile, with yields sensitive to each new inflation or jobs report.
For everyday investors, the key takeaway is that the interest rate environment is likely to remain uncertain for some time. Higher rates affect everything from mortgage costs and car loans to the returns available on savings accounts and bonds. Where stocks go in that environment depends heavily on whether corporate earnings hold up and whether the economy avoids a significant slowdown.
The next major test for rate expectations will come with upcoming U.S. inflation and employment data, which could either reinforce or undercut the case for additional Fed tightening.
