Svmuu News: Federated Hermes fund manager Karen Manna stated in a report that the firm continues to believe the Federal Reserve will largely hold rates steady, while inflation remains one of the most difficult-to-predict macroeconomic variables. She noted that the shift from the low-inflation environment following the 2008–09 financial crisis to the post-pandemic surge in inflation was driven by supply chain disruptions, changes in consumption patterns, and labor market imbalances.
Although many of these distortions have subsided, a series of new variables continue to cast a shadow over the inflation outlook. These variables include tariffs implemented last year, the period of reduced economic visibility around last fall’s government shutdown, elevated energy prices, and substantial capital expenditures related to artificial intelligence. “The result may be that the process of inflation coming down will be more uneven and stop-and-start than what the market has experienced in previous cycles, reinforcing the Federal Reserve’s cautious and data-driven approach.” (Jin Shi)