CIO Notebook: Core CPI Eases the Pressure but Risks Remain

We expect the Federal Reserve to stay on hold through year-end 2026, which may keep borrowing costs elevated and market sentiment uneven in the near term. If equity volatility picks up, it could create attractive entry points for disciplined investors who stay focused on long-term goals rather than short-term swings.

The outlook for two potential rate cuts in the first half of 2027 may eventually support risk assets, but timing remains uncertain. For now, maintaining strategic allocation targets and avoiding reactive portfolio changes appears prudent as policy stays restrictive.