By Divya Chowdhury and Bansari Mayur Kamdar

DAVOS, Switzerland (Reuters) – Guggenheim Partners’ chief investment officer forecast on Monday that the U.S. Federal Reserve is prone to cut rates of interest roughly every quarter in 2025, bringing the reduction to around 75 basis points or perhaps a full percentage point this yr.

The Fed will proceed cutting, albeit on a slower path than had been expected, Guggenheim CIO Anne Walsh told the Reuters Global Markets Forum in the beginning of the World Economic Forum annual meeting in Davos.

Trader bets have moved in the previous few days to simply one Fed rate cut this yr with the possibilities of a second cut hanging within the balance, down from at the very least three a month ago.

Tariffs expected to be imposed by incoming President Donald Trump will probably not be as punishing as most expect, Walsh said, so long as the dollar stays strong because the reserve currency and the U.S. continues to draw capital.

Walsh expects tariffs, on average, to rise by lower than 10% across the board, and be more country-specific.

After a pointy bull run until 2022, the bond market is now trading in a variety for its third yr, Walsh said, with the volatility inside this making it interesting.

“If we get to five% on the 10-year, that is extreme, and that is such an oversold position, it’s a complete buying opportunity,” said Walsh, adding that bond yield spreads could proceed to remain tight, which can even be good for U.S. equities.

She expected stocks to realize farther from positive global themes playing out resembling artificial intelligence (AI), energy and a re-shoring of producing to the U.S., with the S&P 500 delivering returns of 8%-10% by the end-2025.

Walsh said there was some uncertainty attached to Trump’s policies and what is definitely implemented by his incoming administration, and in addition a risk that the U.S. economy slows down greater than is being currently predicted.

“It’s like a game of ping pong … between politics and policy, and that is going to create quite a lot of volatility around our (investing) themes this yr,” Walsh said.

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(Reporting by Divya Chowdhury in Davos and Bansari Mayur Kamdar; Editing by Alexander Smith)