Analyst: Whether Inflation Can Quickly Return to Target Matters More Than Current Levels

Odaily News: Felipe Villarroel of TwentyFour Asset Management said in a report that the Federal Reserve faces a difficult balancing act. The portfolio manager stated: "Although inflation remains above target, and recent developments—especially the rise in oil prices related to Middle East tensions—have added upward pressure, the U.S. economy continues to show resilience." Markets are pricing in a 25 basis point rate hike by the Fed on Wednesday. TwentyFour also believes this is the most likely outcome.

Villarroel said: "More important than the current inflation level is whether inflation can return to target quickly enough to prevent inflation expectations from becoming entrenched." He noted that recent remarks by Fed Chair Warsh indicate a high focus on restoring the Fed's anti-inflation credibility, but this meeting will for the first time truly demonstrate how this translates into policy. (Jinshi)