Asset Management: Monthly Macro Insights - November 2025

After years of pandemic-related disruptions, inflationary pressures, and geopolitical instability, the emergence of artificial intelligence (AI) as a general-purpose technology is reshaping economic dynamics. While it offers upside potential, AI also evokes memories of the dot-com boom of the late 1990s.

AI: A double-edged sword for economic prospects

AI is widely seen as a catalyst for long-term economic growth. However, the rapid development of AI also poses significant risks, particularly to financial stability. Never before has so much capital been deployed so quickly into a technology that, despite its promise, remains largely unproven as a consistent source of profit. While AI offers transformative potential, its financial and systemic implications must be carefully managed to avoid destabilizing the broader economy.

A rate cut amid data fog…

Although the US economy has shown resilience so far this year, prompting upward revisions to growth forecasts, it seems premature to conclude that the shock triggered by the tariff surge had no effect on growth.

Amid heightened uncertainty and signs of labour market cooling, the Fed delivered a second 25 basis point (bps) rate cut this year at its October meeting. However, the decision was not unanimous: Governor Stephen Miran advocated for a larger 50 bps cut, while Kansas City Fed President Jeff Schmid preferred no change. Multiple dissents are rare, especially in competing direction – for both looser and tighter policy than the majority decision – which occurred only three times since 1990.

The ECB on hold

While the Fed is easing its monetary policy, the ECB has been on pause for some time amid a complex policy environment. Although wage inflation is expected to decline and various forces should exert a downward pressure on goods prices, core inflation surprised to the upside in October, driven by sticky price pressures in the services sector.