Federated Hermes fund manager Karen Manna said in a report that the firm still expects the Federal Reserve to remain largely on hold, while inflation continues to rank among the hardest macroeconomic variables to forecast. She said the shift from the low-inflation environment that followed the 2008-09 financial crisis to the post-pandemic surge in prices was driven by supply-chain disruptions, changes in consumption patterns and labor-market imbalances. Many of those distortions have faded, she said, but a new set of variables is still clouding the inflation outlook. Manna pointed to tariffs implemented last year, a period of reduced economic visibility around the government shutdown last autumn, elevated energy prices and heavy capital spending tied to artificial intelligence. In her view, the disinflation process may prove more uneven and more episodic than what markets experienced in past cycles, reinforcing the Fed’s cautious, data-dependent approach. The report was cited by Jin10, according to Odaily.
Federated Hermes fund manager Karen Manna said in a report that the firm continues to expect the Federal Reserve to remain largely on hold, while inflation remains one of the most difficult macroeconomic variables to predict.
Manna said the move from the low-inflation backdrop after the 2008-09 financial crisis to the post-pandemic jump in inflation was driven by supply-chain disruptions, shifts in consumption patterns and imbalances in the labor market.
She said many of those distortions have already faded. Even so, a fresh set of variables is still clouding the inflation outlook. Those include tariffs introduced last year, a period of weaker economic visibility around the government shutdown last autumn, high energy prices and substantial capital expenditure related to artificial intelligence.
Manna said, "The result may be that the process of inflation moving lower is more uneven and more staged than what markets experienced in previous cycles, reinforcing the Federal Reserve's cautious and data-dependent approach."
The report was cited by Jin10, according to Odaily.
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