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Welcome to Investing Insights. I'm your host, Ivana Hampton. Do you expect inflation to

stick around or even rebound in 2025? That probably seemed unlikely several months ago,

but inflation has come in hotter than most forecasters expected.

Uncertainty is looming over the impact of potential tariffs

and other policies from the new Trump administration.

The Federal Reserve has lowered its forecast for interest rate cuts in 2025.

At the same time, market watchers are

expecting a strong economy to persist. Yet they say that under the hood, some price pressures

are moderating. Morningstar Inc. Markets reporter Sarah Hanson has been tracking this story. She joined

the podcast to talk about what she's learned. Thanks for being here,

Sarah. Thanks for having me. Well, it seems like the markets and the Fed's perspective on

inflation has changed over the past few months. What's different? So this is one, this is actually

one of the biggest stories in markets right now. A lot of strategists and economists that I've spoken with over the past month or so now consider stalled progress on inflation to be actually one of the biggest risks for stocks and bonds this year.

And that was certainly not the case just last quarter.

So here is the back story.

The Fed has been grappling with inflation for more

than two years at this point after it spiked in the aftermath of the pandemic. That's when we saw

it hit, you know, 8, 9 percent, 40-year highs. We have made a lot of progress over the past two years

in bringing price pressures lower, but we're still a little bit off

from the Fed's target. They're aiming for 2% as measured by something called the PCE price index.

And right now, the annual inflation rate is about 2.4% and it's even a little higher, 2.8%

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