doritoscrashcourse2| Chief Investment Director of GAM Multi-Asset Solutions: Fed officials seem to have no idea about U.S. inflation

Julian Howard, chief investment director of GAM Multi-Asset Solutions, said Fed officials seemed to have "no idea" about inflation in the United States. His comments come as Fed policymakers have been urging patience with interest rate cuts in recent weeks. They believe that inflation has fallen less than previously expected and remains too difficult for the Fed to promote loose monetary policy. Julian Howard said: "doritoscrashcourse2I think the message they send is that they don't know anything."

Fed Waller said on Tuesday that he needed to see more data proving inflation was weakening before supporting interest rate cuts. "Without significant weakness in the labor market, we will continue to work hard," he said at an event at the Peterson Institute for International Economics in Washingtondoritoscrashcourse2I need to see a few more months of good inflation data before I can confidently support a loose monetary policy stance."

Waller's remarks were echoed by other Fed officials, including Boston Fed Chairman Collins. Collins said: "I think the data is very complex and takes longer than I previously thought. We are at a time when patience is very important."

However, Julian Howard said Fed officials had not yet sent a clear message about their expectations or why inflation remained high. He pointed out: "Inflation is well known to be difficult to predict. I don't think they even knew what was happening." "To be honest, it's a credibility issue." He added: "Now (policymakers) believe inflation is falling, but not fast enough."

Data released last week showed that the U.S. CPI rose 3.3 percent year-on-year in Aprildoritoscrashcourse2.4%, slightly lower than 3.3% in Marchdoritoscrashcourse2.5%, well below the June 2022 peak of 9.1%, but still above the Fed's 2% target. Julian Howard said: "Inflation did start to fall, but then it seemed to just stay around 3.5%. Everyone is trying to find an explanation why it stayed at 3.5%. I think it's a challenge."

Julian Howard added that stocks appear to be coping with high inflation levels and have also adjusted expectations for interest rate cuts, which are currently far lower than earlier this year. He attributed the mild market response to changes in large stocks. He explained that these companies currently have high cash levels and can make relatively risk-free investments, such as short-term U.S. bonds.

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