Generali Investments: The Federal Reserve is expected to keep interest rates unchanged, with policy debates shifting clearly away from rate cuts.

```html(1) Generali Investments Senior Economist Paolo Zanghieri stated that the Federal Reserve is expected to keep interest rates unchanged on Wednesday, but the policy debate is clearly shifting away from rate cuts. Stronger inflation data has made it difficult for the easing stance to hold.(2) The year-on-year increase in core PCE is unlikely to drop below 3% anytime soon, and higher energy prices may keep overall inflation elevated and spill over into core inflation. The labor market has stabilized and needs to offset some of the impact of last year's precautionary rate cuts, with inflation risks now dominant.(3) Therefore, the Federal Reserve's tone is likely to be more hawkish, abandoning its easing tendency and reducing forward guidance. As more members may expect no rate cuts in 2026, the dot plot will become central.```