The slowing pace of Fed cuts

Tara Dougherty: Debbie, thank you so much for joining us here in London. Debbie Cunningham is the CIO for our liquidity franchise here at Federated Hermes, overseeing approximately 600 Billion of liquidity assets. Very pleased to have her here with us today. So I'll start with new administration in the White House. Volatility seems to be kind of the name of the game. Wanted to maybe get your thoughts on the trajectory of rates in the US market and some potential impacts that we've seen in these first few days of Trump 2.0.

Debbie Cunningham: Certainly, from a Trump administration perspective, fast and furious is what we've dealt with so far. I'm not sure if anything though in the context of sticking points is hugely impactful for where we are from a monetary policy standpoint with regard to the Fed. Our expectations at this point are 1 to 2 rate cuts by the end of this year. That's drastically changed from where we were in the September meeting when the Fed cut 50 basis points and even, you know, November and into December, and that's reflective of I think what has been termed as sticky inflation. And a resilient consumer from an employment perspective now from a Trump policy standpoint, I don't know that either one of those things are drastically changed in this environment. The policies that his administration is looking to achieve when you look at immigration, when you look at tariffs, potential regulatory changes, all of those to some degree, at least on an initial blush basis, are more inflationary, so sticky inflation and, and maybe even rising inflation. Which brings the Fed's job from an easing perspective to a much lower threshold and then when you look at the other aspect of it from a consumer and an employment perspective, which has been the driving force of US GDP over the last several years, they continue to be pretty resilient from a standpoint of opportunities and openings and availability and with immigration maybe taking some of the workers in the system out of the US, I would think that picture would only improve. So ultimately, we're looking at higher rates for a longer period of time.

Tara Dougherty: OK, there's some talk about potential for a hike maybe down the road, are we in that camp at all?

Debbie Cunningham: We are not in that camp at all. That is something that, there's a broad array of outlooks and it goes from those that think maybe one or two hikes by the end of the year. To those who are still contemplating lowering of interest rates before the end of the year, we think both of those are extreme positions and ultimately where we stand from a yield curve perspective, which is reflective of 1 to 2 rate cuts the remaining portion of this year is where we're also standing at this point, which is good because we're actually seeing value in the marketplace based on that.