Fed Announces Interest Rate Cuts and The Market Just Shrugs

The news is out. The US Federal Reserve has just announced another 25 basis point rate cut as of 17 September 2025, continuing its path towards a looser monetary policy. For months, this has been the event that analysts and investors have been waiting for.

And yet, the market's reaction has been a collective "shrug" one day after. The S-REIT index, which many expected to soar, are trading slightly red. The banks, which many expected to fall, are holding steady. This non-event is one of the most powerful lessons in investing: the difference between news and expectations. 

What "Priced In" Means

While the news of the 25bps rate cut came in last night, pretty much everyone in the markets have been expecting this result. The market is a forward-looking machine. It does not trade on what happens today. Rather, it trades on what it expects to happen in the months to come.

For months, the Fed and various economists have given indications of rate cuts to come. By the time the actual rate cuts came in, it came in as no big surprise. Because there was no surprise, there is no big reaction. The news was already priced in.

We Already Saw The Reaction

The reaction to these rate cuts have already been seen throughout the past few months, where S-REITs kept rallying after a market-wide correction in April. Investors bought up REITs in anticipation of lower financing costs and potential for growth in assets and dividend income.  

We may also observe the market's reaction in the price movements of our S-Banks. DBS price managed to break above $51 to an all time high around $53. Now, all three banks see their price consolidating slightly below ATH levels. Market participants been balancing the headwind of lower interest margins against the strength of their wealth management arms and the resilient Singaporean economy.

The Folly of Post-Event Speculation

The trajectory of rate cuts is only one factor among a thousand others that can influence the market. Geopolitical events, economic data and company-specific news will keep appearing to shake the market. This is precisely why we do not invest specifically around macroeconomic events. A strategy based on guessing the market's next move is a stressful and unreliable path.

Company earnings reports remain the best "ground truth" to base our valuations and investing decisions on. The dramas of the market will keep playing out. The drama around rate cuts happened to help my conviction in REITs, compelling me to buy REITs as far as possible to front-run the favorable interest rate environment.

Let's stay anchored in business fundamentals and invest for our peace of mind. How did you react to the Fed's announcement? Did the market's muted response surprise you?


Disclaimer: This blog post is for entertainment purposes only and does not constitute financial advice. Please do your own due diligence.

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