Two the Point — Where Does The Fed Go From Here?

As we wrap up our Mid-Year Outlook series, we’re shifting our focus to the Fed’s next move, and the balancing act between inflation and growth. While policy clarity remains elusive, thoughtful positioning is more important than precise predictions.

Key Insights:

• Tariff-driven price pressures could lead to a temporary inflation uptick this summer, even as broader inflation trends have moderated.
• The Fed is likely to stay on hold into the fall, with the next viable policy window opening at the October FOMC meeting.
• Core inflation remains above 2%, but wage growth and employment trends give the Fed room to remain patient for now.
• Our base case: 1.0% real GDP growth and inflation above 3% by year-end, implying a cautious Fed approach to rate cuts.
• In a late-cycle environment, flexibility and diversification matter more than ever as markets navigate policy and macro uncertainty.

Thanks again to everyone who joined our Mid-Year Outlook Webinar. If you happened to miss it, the full replay is available below.