Northern Trust Strengthens Its Team for Foundations and Institutions in the Southeastern Part of the U.S.

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Northern Trust announced on Wednesday that John Coates has joined Foundation & Institutional Advisors (FIA) as Senior Vice President and Senior Portfolio Advisor in Miami, where he will provide investment solutions to the firm’s foundation, endowments, and non-profit institutional clients.

Coates was a Senior Portfolio Advisor for PNC Institutional Asset Management for nine years, where he also managed relationships with corporate and non-profit clients, providing “intellectual leadership, training, and insights on their investment and retirement assets,” according to the statement.

Before PNC, he was a Portfolio Manager at Franklin Templeton Investments, where he co-led global and international equity SMA accounts.

Earlier at Franklin Templeton, he was also a portfolio manager with the Templeton Global Bond Managers team, where he managed global short-duration fixed income mutual funds. Under his management, the funds achieved first-quarter performance rankings within their respective S&P Micropal universe, the statement adds.

“John brings extensive experience in global investment management, with deep knowledge of multiple asset classes, acquired over nearly 30 years in the investment industry,” said Darius A. Gill, National Practice Executive of FIA.

Coates holds an MBA from Florida Atlantic University and a bachelor’s degree in Finance and Management from Florida State University. He holds CFA and CAIA certifications. He is a member of the CFA Society of Miami and South Florida, as well as CAIA Miami. He completed the Leadership Broward leadership development program and co-chairs the Socially Good Committee.

Lakpa Expands Its Network in Mexico Through an Alliance With Banorte

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(SU WEB) Grupo Financiero Banorte

About five months after debuting in the first-tier banking segment in Mexico, Lakpa continues to expand its networks in the country. The newest addition is Banorte Casa de Bolsa, with which the fintech recently signed a commercial alliance aimed at strengthening its offerings.

According to Matías Correa, founder and CEO of the tech firm, this agreement gives Lakpa’s clients access to the investment products and platform of the Mexican brokerage firm, part of the prominent Grupo Financiero Banorte. Additionally, they will have access to the products the bank can offer.

The executive highlights that the alliance enhances the proposal of the Chilean-origin fintech, offering more investment alternatives for its clients. On the flip side, he adds, “We expect to bring clients to Banorte,” which he describes as “a highly recognized group at the national level.”

With this signing, the company now has six commercial alliances in the Latin American country. In January of this year, they sealed their first agreement with a first-tier bank by signing with Scotia Wealth Management. They also have partnerships with Actinver, GBM, Invex, and Finamex.

Correa moved to Mexico in 2022 to lead the expansion of the Chilean firm in the country, which has been growing since then. Now, the executive reports that the fintech is on track to close its first year of operations there with 150 million dollars in assets under advisement. Additionally, he adds, they expect to increase the number of investment advisors and referrers from the current 18 to 30 by the end of the year.

European Football: Strong Investments From Funds Provoke Suspicion

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The Euro 2024 kicks off today, June 14, with the opening ceremony and the inaugural match between Germany and Scotland. But the beautiful game will be in the spotlight not only for the goals but also for the significant investments it attracts. In short, many things are happening in football both on and off the field, according to an analysis by Preqin.

While the ball rolls in Germany, Manchester City, the champion of England, has taken legal action against the English Premier League (EPL) over rules concerning clubs’ commercial deals with companies linked to their owners. This move could “drastically alter the landscape of professional football,” according to a recent publication by the London Times. Manchester City is owned by Sheikh Mansour of Abu Dhabi through his City Football Group, in which the international private equity firm Silver Lake also has a significant stake.

In an era where fund managers have become key players in sports, complex financial ties are increasingly common. However, external ownership is not welcome everywhere.

Last year, Advent International, Blackstone, CVC, and EQT were interested in buying a €1 billion stake in the broadcasting rights of the German Bundesliga. But the DFL Deutsche Fußball-Liga abandoned the deal in February amid widespread fan protests that included chocolate coins and fireworks tied to remote-controlled cars. CVC already owns a stake in the broadcasting rights of France’s Ligue de Football Professionnel.

Germany remains an outlier, partly because its clubs are protected from full shareholder takeovers. In England, Clearlake Capital holds a stake in Chelsea. Newly promoted to the EPL, Ipswich Town received £105 million for 40% of its capital from Ohio-based Bright Path Sports Partners in March.

Everton, a Premier League club, recently saw a potential deal with 777 Partners fall through. This Miami-based company’s investments in European football include Genoa, Sevilla, and Standard Liège.

RedBird Capital Partners (AC Milan, Toulouse, and Liverpool), based in New York, recently raised $4.7 billion to invest in sports, media, and financial services. Like the 24 national teams competing in the Euro 2024, their goal is to succeed in the world’s greatest sport.

Tiffani Potesta Joins Voya IM as the New Head of Distribution

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Voya Investment Management (Voya IM) has hired Tiffani Potesta as the new Head of Distribution, who will join the company on July 8. She will be based at the New York headquarters and will report to Matt Toms, CEO of Voya IM.

In her role, she will be responsible for overseeing all aspects of distribution for Voya IM’s institutional and intermediary businesses, including defining the strategic direction in national and international sales, distribution strategy, product positioning, client service, and relationship management.

“We are pleased to announce that Tiffani will be joining Voya IM to lead our Distribution team. Tiffani brings a wealth of experience across multiple facets of the industry, and I am confident that her expertise will benefit both our clients and Voya. We look forward to Tiffani’s leadership as we continue to strengthen our distribution of investment products and services globally across institutional, sub-advisory, and intermediary channels,” said Matt Toms, CEO of Voya IM.

Potesta has over 20 years of experience in the asset management industry, where she spent most of her career designing and implementing business and distribution strategies, ensuring asset longevity, mitigating risks, and fostering revenue and client diversification. She joins Voya IM from Schroder Investment Management North America, where she held various leadership positions, most recently as Chief Strategy Officer and Head of Distribution. Previously, she held account management roles at Deutsche Bank, First Eagle Funds, and Allianz Global Investors.

The Fed Insists on Higher Rates for Longer and Aims for Only One Cut In 2024

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Yesterday’s meeting of the U.S. Federal Reserve (Fed) went as expected, with no changes to interest rates yet, but it did convey some clear messages. One of the most relevant was that the Fed sees less need and urgency to ease its monetary policy but still leaves the door open for cuts this year. The key point is that, in the short term, it expects inflation figures higher than anticipated at the beginning of the year, although its long-term projections still show inflation returning to 2%.

“Central bankers delivered a seemingly aggressive surprise at the June FOMC meeting. The updated median projection for the federal funds rate, or dot plot, now indicates a single rate cut by the end of the year, compared to three expected in March. This change of opinion was likely due to a slight improvement in inflation expectations for this year and next,” says Christian Scherrmann, U.S. economist at DWS, regarding his overall view of yesterday’s meeting.

Regarding this change of opinion, Jean Boivin, head of the BlackRock Investment Institute, points out that the Fed has done this several times before, so they don’t give much weight to its new set of projections. “Powell himself said he doesn’t consider it with high confidence, emphasizing the Fed’s data-dependent approach. Regardless of the Fed’s forward guidance, incoming inflation surprises, in any direction, will likely continue to lead to significant revisions in policy expectations,” he explains. Boivin believes that given the lack of clarity from central banks on the path forward, markets have become prone to reacting strongly to individual data points, as we saw again today with the post-CPI jump in the S&P 500 and the sharp drop in 10-year Treasury yields.

For Raphael Olszyna-Marzys, international economist at J. Safra Sarasin Sustainable AM, Powell’s message was very balanced. “Although the dot plot shifted upwards, and most officials do not expect any cuts or only one this year, they are also very aware that maintaining a restrictive policy for too long could unduly harm the labor market and the economy. So far, the labor market is much more balanced, which should allow for a downward trend in inflation,” he argues.

What does this mean?

In the opinion of David Kohl, chief economist at Julius Baer, the updated summary of economic projections suggests that only one rate cut in 2024 and higher rates in the long term are appropriate. “The increase in inflation forecasts and the maintenance of growth expectations confirm the view that the FOMC wants to keep interest rates high for longer. The latest U.S. inflation figures, which were surprisingly low, were well received and increase our confidence that the Fed will cut its benchmark rate at its September meeting. We expect the Fed to pause from then and cut rates once more in December in response to a cooling labor market and easing inflation.”

For Kohl, the appropriate path for the federal funds rate has changed significantly for 2024: “Four FOMC participants do not see the need for rate cuts in 2024, seven advocate for one rate cut, and eight for two rate cuts.” This means, as he explains, that the median projection for 2024 has moved towards one rate cut and a preference for cuts in 2025. “The longer-term rate projection has increased, confirming the view that the FOMC wants to keep interest rates high for longer. The adjustment of the long-term rate path is an important acknowledgment that the U.S. economy is withstanding higher interest rates much better than feared,” says the chief economist at Julius Baer.

This view is also shared by James McCann, deputy chief economist at abrdn. “In reality, the median FOMC member now expects only one rate cut in 2024, compared to the three expected in March. This change in stance is likely due to higher-than-expected price growth in early 2024, which forced FOMC members to revise their inflation forecasts upwards once again. However, yesterday’s lower-than-expected CPI inflation surprise was much more encouraging, and with most members divided between one or two cuts, we wouldn’t be surprised to see the market continue to flirt with the option of multiple rate cuts this year,” adds McCann.

Alman Ahmed, global head of macro and strategic asset allocation at Fidelity International, emphasizes that during the press conference, Chairman Powell stressed the importance of incoming data flow, especially on the inflation front. “We have seen the Fed completely abandon any dependence on forecasts to set its policy, so we continue to expect it to maintain its current data-dependent approach,” he notes.

Forecast on rate cuts

In Ahmed’s opinion, his base case is that there will be no cuts this year, but “if inflation progress continues during the summer months or labor markets begin to show some signs of strain, the likelihood of one increases,” he explains. That said, he adds: “The U.S. economy continues to hold up, and yesterday’s release was affected by vehicle insurance components and airfares, meaning the bar for starting cuts remains high.”

Conversely, from Julius Baer, Kohl points to September, followed by another cut in December, and gradually reducing the official interest rate in 2025 with three more cuts. “The latest U.S. inflation data, which surprised to the downside in May, increase our confidence in a rate cut at the September FOMC meeting, while further cooling of the labor market in the second half of the year should motivate another round of policy easing at the December meeting,” he argues.

According to Scherrmann, more time will be needed for the term “progress” to move from the press conference to the post-meeting statement, where it would serve as a definitive signal for a first rate cut. Meanwhile, he believes the Fed must avoid scenarios like those in the fourth quarter of 2023, when financial conditions experienced unnecessary easing due to rising rate cut expectations. “Given the inconsistencies observed during the June meeting, we conclude that this goal has been successfully achieved for now: markets have discounted slightly less than two cuts in 2024, a slight decrease from pre-meeting expectations. As we connect the dots, we are likely to agree with this assessment,” defends the DWS economist.

Fed vs. ECB

In the opinion of Wolfgang Bauer, manager of the fixed income team at M&G Investments, these days we are witnessing a strange “mirror world” between central banks. “After the ECB cut interest rates and revised up its inflation forecasts last week, the Federal Reserve did exactly the opposite. Just hours after the release of surprisingly low inflation data, the Federal Reserve decided to keep interest rates at current levels and, more importantly, revised up its dot plot, indicating that it would only cut rates once this year. The Federal Reserve’s caution is likely to help the ECB hawks delay further rate cuts for now. Although the economic situation in Europe is different from that in the U.S., it seems unlikely that the ECB will proceed with monetary policy easing while the Federal Reserve remains on hold,” comments Bauer.

From eToro, they believe that this latest update also underscores that the Fed does not feel pressured to lower rates, as other G7 central banks (such as the BoC and ECB) have recently done.

World Environment Day: Capturing Value in a Carbon-Constrained World

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As investors, World Environment Day serves as a reminder of the crucial intersection between environmental sustainability and economic viability. As global attention increasingly focuses on the urgent need to address climate change, carbon pricing mechanisms (CPM) emerge as a fundamental lever in the transition to a low-carbon economy. This is exemplified by the European Union’s decision earlier this year to expand its Emissions Trading System (ETS) to include maritime transport and last year’s decision to create an additional ETS to address CO2 emissions from fuel combustion in buildings, road transport, and other sectors.

These significant measures highlight the growing importance of regulating carbon emissions across various sectors. This evolution, along with current upward trends in North American carbon markets driven by stricter regulatory reviews and supply adjustments, signals a fundamental shift toward stricter carbon pricing mechanisms globally, emphasizing the need for investors to understand the financial implications.

But first things first: What is carbon pricing? What is its purpose, and how does it work? Regulatory carbon pricing encompasses policy frameworks like carbon taxes and cap-and-trade emission trading systems designed to assign a monetary value to greenhouse gas emissions. According to the World Bank, there are currently 75 carbon taxes and emission trading systems worldwide covering about 24% of global emissions.

These mechanisms work by setting a direct price on carbon emissions or establishing a market-based emissions cap with tradable allowances. By internalizing the externalities associated with carbon emissions, carbon pricing essentially creates economic incentives for emission reduction and technological innovation. The aforementioned example of the EU’s ETS expansion shows the financial implications for shipping companies that continue business as usual: companies in the sector must purchase or surrender EU Allowances (EUAs) for each ton of CO2 (or CO2 equivalent) reported, potentially increasing operational costs. Generally, the cost of compliance is expected to be passed on to end customers through higher freight rates, potentially affecting the cost competitiveness of these companies.

The exposure of companies to carbon pricing varies greatly by sector and geography: the recent drop in EU carbon prices due to oversupply and lower emissions from the power sector contrasts with the upward momentum of the California-Quebec joint cap-and-trade program, reflecting the complex interaction of market forces in different regions. Carbon price volatility, influenced by factors like regulatory changes and market dynamics, can have diverse impacts: companies in carbon-intensive sectors such as energy, manufacturing, and transport face significant cost implications and potential asset stranding. These companies must manage higher operating expenses and possible compliance costs, which can impact EBITDA margins and alter competitive dynamics. However, early adopters of lower-emission technologies—such as cleaner fuels like liquefied natural gas (LNG) or energy-saving technologies like air lubrication systems and rotor sails in the maritime sector—are likely to benefit from regulatory incentives and cost savings. These companies can achieve competitive advantages beyond lower compliance costs, such as better market positioning and enhanced brand reputation.

The volatility of carbon prices, influenced by factors such as regulatory changes and market dynamics, can have diverse repercussions: companies operating in carbon-intensive sectors like energy, manufacturing, and transport face significant cost implications and potential asset stranding. These companies must manage higher operating expenses and possible compliance costs, which can affect EBITDA margins and alter competitive dynamics. However, early adopters of lower-emission technologies—such as cleaner fuels like liquefied natural gas (LNG) or energy-saving technologies like air lubrication systems and rotor sails in the maritime sector—are likely to benefit from regulatory incentives and cost savings. These companies can achieve competitive advantages beyond lower compliance costs, such as better market positioning and enhanced brand reputation.

From an investor’s perspective, assessing a company’s exposure to carbon pricing is an integral part of overall risk management and portfolio optimization. The ability of a portfolio company to effectively manage carbon pricing—through strategic asset allocation, operational efficiency improvements, and robust environmental, social, and governance (ESG) practices—becomes a determinant of its long-term financial performance and market valuation.

A significant number of large-cap companies already consider an internal carbon price, often to make more informed investment decisions (though when internal carbon prices are particularly low, they may often be perceived as a marketing tool). However, very few companies propose a business plan that comprehensively integrates the implications of evolving carbon prices. Therefore, integrating carbon pricing into investment analysis requires a sophisticated understanding of regulatory environments, sectoral impacts, and corporate strategies by the investor, which can be reflected in the following approaches:

In addition to staying informed about regulatory developments, it is increasingly important to integrate carbon pricing scenarios into stress tests of corporate earnings, cash flows, and valuation metrics. Additionally, it is crucial to note that the aforementioned carbon price volatility presents both a risk and an opportunity: investors can consider diversifying exposure across regions and sectors to mitigate the impact of price fluctuations. However, carbon pricing can also introduce market inefficiencies that astute investors can exploit: investors leveraging carbon futures and options can capitalize on these price fluctuations to generate alpha. Moreover, inefficiencies in company valuation based on carbon exposure can offer value investment opportunities.

Undervalued companies because the market underestimates their carbon management capabilities can provide attractive entry points for investors. Last but not least, the issue of carbon pricing is one where ESG integration and active ownership gain critical importance: understanding portfolio companies’ compliance strategies, promoting transparency in carbon emission reporting, and adopting best practices for emission reduction help create a more comprehensive framework for identifying value drivers.

From an investor’s perspective, World Environment Day and the issue of carbon pricing remind us how the structural shift to a low-carbon economy underscores the need for long-term strategic allocation to sectors and companies aligned with this transition. This is also accentuated by other recent regulatory developments, such as the start of reporting obligations for the EU’s Carbon Border Adjustment Mechanism (CBAM) in 2023, which aims to level the carbon pricing playing field for traded goods with intensive emissions. By integrating carbon pricing considerations into investment frameworks, investors can not only mitigate risks but also seize the opportunities presented by the transition. Thus, alignment with global climate goals should not be seen merely as a response to regulatory pressures but rather as a strategic imperative that enhances long-term value creation.

Private Debt: A Resilient Asset in a Diversified Market

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Private debt has established itself as a resilient and diversified market, according to the latest report by Union Bancaire Privée (UBP).

“It is said that private debt emerged as an asset class following the global financial crisis. The contraction of bank lending, combined with quantitative easing and zero interest rate policy, created conditions where both borrowers and investors turned to private debt. This perspective of private debt, as a relatively new asset class associated with specific monetary policy conditions, raises questions about the sustainability of private debt and, in particular, how it will remain relevant for borrowers and investors now that interest rates have normalized,” they explain.

In this regard, their response is clear: the entity expects private debt to continue evolving and growing. “This growth will continue as long as there is an insufficient supply of bank financing and non-bank financial intermediaries, such as funds, to channel financing to potential borrowers. In particular, although the period of low interest rates spurred the growth of private debt, its continued growth does not depend on any specific monetary policy. Over the past decade, direct lending and, to a lesser extent, commercial real estate have been the dominant segments within private debt,” they explain in the report.

Additionally, they are convinced that investors will increasingly seek to diversify away from these segments and favor those that offer both resilience and attractive returns. “We believe that real economy sectors, such as residential real estate and asset-backed financing, meet these requirements and will attract investors. Origination will be an important differentiator among asset managers. The real economy is more fragmented than the world of private equity firms or commercial real estate. Originating transactions in the real economy will require origination capabilities through which asset managers will differentiate themselves,” they argue.

Delving into Assets

Interestingly, private debt has existed in various forms for over 4,000 years, thanks to its very nature: it is privately negotiated between the borrower and the lender. “The strength of private debt lies in its diversity of strategies and transactions. Its longevity is due to its flexibility and its ability to reinvent itself for new financing opportunities. The recent growth of private debt is due to the scarcity of bank loans and the evolution of non-bank financial intermediaries. We expect private debt to continue growing, particularly in strategies different from those that have been predominant in the last decade,” notes the UBP report.

In this regard, one of the report’s conclusions is that the increase in demand for private debt among borrowers is driven by a shift in the supply of credit from the banking system. “In the absence of a change in the supply of bank credit, which we believe is unlikely, the demand for private debt will continue to grow,” they insist. This has led to direct lending being the fastest-growing segment, according to Preqin data, followed by distressed debt, real estate debt, and mezzanine debt.

Another notable conclusion of the UBP report is that direct lending has dominated the narrative around private debt since the global financial crisis. “Private equity fund managers have been able to deploy a significant amount of capital for transaction financing, resulting in the origination of borrowers by private equity firms. Increasingly, according to the report, fund managers seek to diversify away from these sponsor-backed loans and towards other sectors, such as asset-backed financing,” they explain.

Furthermore, the report indicates that investors in direct lending funds likely have indirect exposure to the private equity sector. “We have observed recent reports of delays in private equity exits and an increase in loans within portfolio companies to finance private equity dividends and payments to their investors. These reports are likely short-term cyclical, but they serve as a reminder that transaction origination is a determinant of diversification,” they clarify.

The Demand for Private Credit

In UBP’s view, not all investors have the resilience needed to maintain their investment allocations during market downturns. “An allocation to private debt offers diversification relative to public debt markets. Within private debt, there are many opportunities for diversification, and the four major segments offer diversification among themselves and relative to public debt markets. Greater diversification can be found outside of sponsor-backed direct lending and commercial real estate financing. We believe that investors will increasingly be drawn to other strategies,” the report indicates.

Lastly, the report notes that the market’s expectation is that the transition to normalized interest rates is complete and that short-term rates have peaked. This implies that market commentary has shifted to when rates will begin to fall and how quickly they will do so, and, in response, bond markets have already moved. “Credit spreads have fallen significantly, anticipating better times ahead. However, some sectors still need to emerge from the transition and will likely continue to face headwinds. For highly leveraged borrowers, it is not enough that rates have peaked; they need rates to fall. In the commercial real estate sector, it could take several years to overcome the oversupply and financing gap. We believe it makes sense to invest now, entering a period of falling rates. However, we suggest it is better to choose strategies that do not depend on a rapid fall in rates, are less leveraged, and are not expected to face headwinds in the coming years,” they conclude from UBP.

 

BNY Mellon IM Changes its Brand to BNY Investments

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In celebration of the 240th anniversary of the creation of the Bank of New York, the entity has sought to project its innovative spirit through a rebranding. From now on, the commercial brand will be BNY, updating its name and logo, and Mellon IM will become BNY Investments.

According to the firm, to improve familiarity with who they are and what they do, they have updated their logo and simplified their brand to BNY, while the legal name will remain The Bank of New York Mellon Corporation. “The changes to the logo include a more modern, custom font, a simplified structure, and a distinctive teal color scheme for the arrow,” they note.

The new BNY brand and logo will be implemented across the company immediately, with updates continuing over the next 12 months.

“Under our new corporate brand, BNY Mellon Investment Management will also be abbreviated to BNY Investments. This abbreviated name better represents the variety of distribution and advisory services, beyond asset management, that we offer to our clients,” they add.

Finally, they clarify that BNY Mellon Wealth Management has also been abbreviated to BNY Wealth, and Pershing will become BNY Pershing “to maintain a unified visual identity.”

The SEC Initiates the Collection of Diversity Policies for Regulated Entities

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The SEC has begun its biennial collection of diversity self-assessment submissions from regulated entities.

“This initiative provides organizations with the opportunity to closely review their diversity and inclusion policies and practices in search of strengths, opportunities, risks, and vulnerabilities,” says the statement from the regulatory agency.

The SEC uses the data from the submissions to evaluate and report on progress and trends in the diversity-related activities of regulated entities.

“The participation of regulated entities in submitting diversity self-assessments is crucial for a more comprehensive understanding of the diversity practices and policies being implemented, as well as for sharing information on practices and identifying opportunities,” according to Nathaniel H. Benjamin, Director of the Office of Minority and Women Inclusion (OMWI).

Conducting and submitting diversity self-assessments is voluntary and is not part of the SEC’s examination process. SEC-regulated entities can use the Diversity Self-Assessment Tool (DSAT) to conduct a self-assessment.

Alternatively, regulated entities can submit diversity self-assessments in the format of their choice.

The Fed Maintains Rates Despite Inflation

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The FOMC announced Wednesday that it will maintain the target range for the federal funds rate between 5-1/4 and 5-1/2 percent, based on strong U.S. economic activity, despite positive signs in inflation.

“Recent indicators suggest that economic activity has continued to grow at a solid pace. Job gains have remained strong and the unemployment rate has stayed low. Inflation has decreased over the past year but remains elevated,” says the Fed’s statement.

While the Fed Committee was meeting, it was revealed that the consumer price index grew 3.3 percent compared to the same month in 2023, marking the smallest increase since October.

However, the monetary authority insisted that “in recent months, there has been modest progress toward the FOMC’s 2% inflation target.”

The Committee considers that the risks to achieving its employment and inflation goals have moved toward a better balance over the past year. However, economic outlooks remain uncertain, and the Committee remains highly attentive to inflation risks, the statement adds.

In support of its objectives, the FOMC decided to reduce its holdings of Treasury securities and agency debt and mortgage-backed securities.

Additionally, the Committee does not expect it to be appropriate to reduce the target range until there is greater confidence that inflation is moving sustainably toward 2 percent.

Expert Forecasts

Before the Fed’s resolution, experts from various management firms opined on the measures the monetary authority would take towards the end of the year.

For example, Blerina Uruci, Chief U.S. Economist at T. Rowe Price, said she expects the Fed to show only two cuts for 2024.

“This is a very consensual forecast, as most FOMC members, including (Jerome) Powell, want the September meeting to be optional. If the economy continues to hold up and inflation remains stable, the market can discount the price of September as data evolves,” she commented.

However, the expert warned that it is expected to be a very tight decision for many participants, given the resilience of the labor market, and for this reason, she believes the risks tilt in an aggressive direction, meaning there could be only one cut this year.

On the other hand, Charlotte Daughtrey, Equity Investment Specialist at Federated Hermes Limited, stated that U.S. inflation was well received by the market. However, Daughtrey warned that this would not be a strong signal to extrapolate this single data point and “would expect the Fed to continue acting cautiously, with the prospect of limited rate cuts for the remainder of the year.”