The Federal Reserve is on track to keep interest rates on hold “for the foreseeable future” and may even increase them, as central banks await more direction on President Trump policies, Pimco CIO Dan Ivascyn told The Financial Times.

The chief investment officer of the $2 trillion asset management firm said he was seeking “more clarity either on the data front or the policy front.”

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Ivascyn made the remarks at a time when the U.S. economy has proven more resilient than economists have expected, Wall Street debates the impact of the sweeping tariffs that Trump has threatened — and Trump said he will call on the Federal Reserve to bring down borrowing costs “immediately.”

“A lot of the policies being introduced can be very, very positive for growth [and] productivity over the long run,” Ivascyn said.

He said he views “tension between what may make sense over the long run,” adding that Trump’s policies may “lead to some pressures over the short term.”

Rate increases, Ivascyn said, were “certainty possible” but not his baseline scenario.

The CIO noted that recent consumer surveys have shown an uptick in their inflation expectations, and that this data is often a leading indicator.

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“We’re not out of the woods yet from an inflation perspective,” Ivascyn said.

In 2024, the Federal Reserve cut interest rates by a full percentage point. In December, Fed officials indicated they were on track to cut interest rates by just two quarter points in 2025.

Federal Reserve Chairman Jerome Powell said inflation was moving “sideways,” prompting the bank to consider a “more cautious” approach to rate cuts this year.

Some Fed officials had begun to consider Trump policies in their forecasts, Powell said.

This more hawkish approach to interest rates at the Fed has led to a selloff in U.S. government bonds. As a result, the 10-year Treasury bond is trading 4.5% above lows of 3.6% in September.

Pimco has been increasing its government bond exposure to take advantage of the higher yields, Ivascyn said.

“The constructive view on fixed income is not predicated on the Fed cutting more from here,” Ivascyn said.

Fed policymakers will meet next week on January 28-29. They are widely expected to keep rates on hold at least until the summer.

Noting the pricey valuations of stocks, Ivascyn warned that a further increase in Treasury yields could hit stocks.

“Relative valuations [between stocks and bonds] are about as wide as we’ve seen in a long time,” he said. “We think, concerning policies that may take yields higher, very well may take stocks lower as well.”

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