Uruci of T. Rowe Price Confident Inflation Will Hit 2%

• The Fed's reaction function, particularly under Kevin Warsh, is now clearer, indicating a strong commitment to the 2% inflation target, even if it means acting like a 'single mandate' central bank temporarily.
• Uruci is optimistic about inflation falling to 2% due to productivity gains, especially from AI adoption, which she believes will be disinflationary in the near and medium term.
• She anticipates more volatility in rates due to a lack of forward guidance from the Fed, volatile economic data, and cross-currents in the labor market and inflation.

Blerina Uruci, T. Rowe Price Chief US Economist, expresses confidence that inflation will reach the Fed's 2% target, primarily driven by resilient productivity gains and the disinflationary effects of AI. She acknowledges the Fed's current hawkish stance and anticipates continued market volatility due to mixed data and lack of clear forward guidance.