Russell Investments: US-Iran Agreement Limits Inflation Risks, Federal Reserve Expected to Hold Rates Steady for an Extended Period

(1) Paul Eitelman, Global Chief Investment Strategist at Russell Investments, stated that resilient economic growth, increased labor demand, and potential inflationary pressures are making it increasingly difficult for the Federal Reserve to signal rate cuts. However, he expects the Federal Reserve will not further tighten its policy. (2) The announced US-Iran agreement has limited the duration of commodity shocks, reducing the risk of temporary energy price surges evolving into broader inflation issues. (3) The one-year forward inflation rate has returned to pre-conflict levels, and the labor market is not as overheated as in 2022, thus not exerting pressure on service prices. Russell Investments expects the Federal Reserve to keep interest rates unchanged for an extended period through 2026.