According to Tai Hui, Chief Market Strategist for Asia Pacific at J.P. Morgan Asset Management, the Federal Reserve is likely to keep interest rates unchanged for the foreseeable future.

Tai Hui stated that, given most committee members view the current policy stance as already neutral, the Fed can afford to be patient and monitor the Middle East conflict along with its implications for the economy and inflation.

He also noted that the divergence among policymakers highlights a lack of consensus within the Fed during a period of high uncertainty, a situation that may persist even after a new chair assumes office.

He added that optimists might argue such disagreement is precisely what is needed amid rising uncertainty and investor demands for the Fed to maintain its independence.

Despite rising U.S. Treasury yields, this trend is insufficient to support a long duration outlook, given the tail risks of potentially higher inflation and the absence of a clear resolution to shipping disruptions in the Strait of Hormuz.

Furthermore, upside risks to the U.S. fiscal deficit also contribute to the pressure.