Active Debate Is Important at the Fed, Shah Says

Investors may be underpricing the risk that the Federal Reserve abandons its bias to cut interest rates, implying a more hawkish path if inflation or growth data stay firm. Seema Shah of Principal Asset Management said central banks, especially the Fed, face a transition period as a new chair approaches. The piece is market-relevant because a shift in Fed policy expectations can move rates, equities, and FX broadly.

Analysis

Investors may be underpricing the risk that the Federal Reserve abandons its bias to cut interest rates, implying a more hawkish path if inflation or growth data stay firm. Seema Shah of Principal Asset Management said central banks, especially the Fed, face a transition period as a new chair approaches. The piece is market-relevant because a shift in Fed policy expectations can move rates, equities, and FX broadly.