PIMCO: Expects the Federal Reserve to hold rates steady this year, focusing on two core mechanisms

Glonghui, May 19 — Marc Seidner, Chief Investment Officer for Non-traditional Strategies and Managing Director at PIMCO, pointed out that although the market is currently experiencing short-term inflationary pressures, long-term inflation is expected to remain stable for three main reasons: tightened fiscal policy, a loose labor market, and a policy interest rate that sits between neutral and tight, which significantly reduces the risk of persistent inflation. If crude oil prices can be maintained at around $70 per barrel, inflation will stay controllable. Regarding the Federal Reserve’s moves, he believes it will remain on hold this year, but attention should be paid to the two core mechanisms: the new boost to productivity brought by AI and the risks facing the labor market.