Market Minutes Audiocast: The Federal Reserve, interest rates and inflation

SPEAKER 1: Welcome to "Market Minutes" an audiocast to help you stay informed on key topics likely to affect markets, the economy, and investors. Today's topic is the Federal Reserve, interest rates, and inflation. Here's chief investment officer, Eric Freedman. 
ERIC FREEDMAN: Our underlying thought is that the Federal Reserve is going to hold true to their statements where they asserted that inflation remains more persistent than they would like and that the likelihood of interest rates being higher for longer is a variable that we think the market is currently at odds with the Federal Reserve on. What I mean by that is that the Federal Reserve, every other meeting releases their summary of economic projections, which lays out the median expectation for Fed Open Market Committee participants. 
And those meeting expectations are currently higher than what the bond market, which obviously doesn't release their perspectives. They release their perspectives every second of every day. There's a gap between what the market is thinking what the Federal Reserve is thinking. And its acute later this year when the market is expecting the Federal Reserve to cut interest rates and into early next year, when the market also expects the Federal Reserve to cut interest rates. 
So we do think that the last time this happened, ultimately, the Federal Reserve won. They convinced investors that they were going to keep interest rates higher for longer. And in fact, they did. And so we think that they're going to stick true to that word. Even though we've had some improvement in inflationary data, it's still not improvement to the levels of the Federal Reserve would like. And their stated level is 2% of annualized inflation. And we're at 5%. The latest read is 5%. So there's some improvement from where we were. But certainly, still a large differential. 
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