Quarterly Economic Report
Q4 2025
Key Takeaways
The SVB Asset Management Economic Report is a quarterly review and outlook on economic and market factors that impact global markets and business health.
01 The FOMC reinitiated its rate cutting cycle in September.
The Committee signaled further cuts, balancing concerns about the labor market with inflation.
02 The labor market showed signs of cooling.
Job growth slowed to an average of 29,000 per month and unemployment rose to 4.3%.
03 Inflation remains elevated but is expected to decline in 2026.
Trade issues, geopolitical tensions and the impending government shutdown affected expectations.
The job market showed signs of softening in Q3 2025.
The FOMC stated in September that in relation to the balance of risks, it “judges that downside risks to employment have risen.”
Inflation increased slightly and remains above target.
Core PCE increased to 2.9% YoY in August, but the Fed stated it expects inflation to resume a disinflationary path in 2026.
“In the near term, risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation.”
— Federal Reserve Board Chairman Jerome Powell, September 17, 2025
Short-end interest rates fell as a result of rate cuts.
The 2-year treasury yield, often seen as a proxy for Fed policy expectations, declined as investors anticipated additional cuts.
Market sector performance saw a broad rally.
Optimism continued surrounding AI, the major stock indexes reached new highs and bond yields were lower across the curve.
Written and researched by SVB dedicated professionals.
