TechFlow news — JPMorgan Asset Management said financial markets may be overly optimistic about the speed and extent of the Federal Reserve's policy easing through rate cuts this year.
JPMorgan Asset Management's macro strategy team, led by Shrenick Shah, said key inflation areas closely monitored by the Fed have not yet shown clear signs of disinflation. The Fed's commitment to combat potential inflation rebounds remains underappreciated, opening the door for adjustments in risk assets.
The Federal Reserve is scheduled to release its first interest rate review of the year later Wednesday. Given renewed inflation risks, the central bank is likely to keep its benchmark interest rate steady at 5.25% to 5.5%, resisting growing dovish expectations.
"We believe markets may be too optimistic, as we see limited evidence of disinflation in certain areas watched by the Fed—particularly core services inflation and wage data," strategists wrote in a report titled "Macro Strategy Outlook." "Persistent resilience in U.S. economic growth could dampen the disinflation process or even generate upside pressure."
