While inflation remains a stubborn issue, the softening economy suggests that developed-market monetary easing could start sometime this year.
Investors continue to wait for clear signals as to the timing and extent of interest rate cuts. After last year’s significant progress on prices, inflation remains elevated and slow in its path toward target levels. That said, although the timing remains uncertain, we believe that the Federal Reserve and European Central Bank will likely begin their downward journey sometime this year. Rather than focus on the “when,” we believe investors should position themselves for this gradual transition, putting cash to work in short to intermediate maturities and capitalizing on price opportunities existing in loans, securitized products and emerging markets debt, among other areas.
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