Staying out of the fray

Question: What is Federated Hermes' view on potential rate cuts?

Phil Orlando: We've had a very out of consensus view on the Federal Reserve's monetary policy response to what's going on with economic growth and inflation. The consensus view coming into this year is that the Federal Reserve is going to cut interest rates seven times with the first cut coming in March. Obviously, that didn't happen. Our view is much more conservative, we think the Fed is going to give us one or two cuts after the election. We've identified November 7 and December 18 as the most likely dates of those cuts. Inflation, right now, has not come down as quickly as the Federal Reserve would like to see, and as a result, we think the Fed is going to be more patient and more data dependent before they give us that first cut. And historically, the Fed has been reticent to change policy directly in front of an election if they can avoid doing so. We believe that the Fed would like to stay out of the market from Labor Day into the election if they can allow that to happen.