---
title: "Invesco: The inflation environment may be more persistent than the market expects, and investors should maintain a cautiously optimistic attitude"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/293097929.md"
description: "Invesco's Global Research Director Benjamin Jones pointed out that the Federal Reserve's meeting minutes indicate that the inflation environment may be more persistent than the market expects. Despite the global economy performing better than expected, investors should remain cautiously optimistic and adopt a more prudent stock-picking strategy, focusing on valuation, balance sheets, and earnings sustainability. The demand for AI may drive up prices, and the pressure of rising prices has become widespread, with upward risks not to be overlooked"
datetime: "2026-07-18T12:26:03.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/293097929.md)
  - [en](https://longbridge.com/en/news/293097929.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/293097929.md)
---

# Invesco: The inflation environment may be more persistent than the market expects, and investors should maintain a cautiously optimistic attitude

According to the Zhitong Finance APP, recently, Benjamin Jones, the Global Research Director at Invesco, expressed his views on AI, inflation, and the Federal Reserve's next steps. Benjamin Jones mentioned that the overall message released by the market remains "stay resilient," rather than "rest easy." The performance of the global economy and financial markets continues to exceed many expectations. Although the high-interest environment has indeed slowed economic activity, it has not yet halted the expansion momentum. The impact of energy shocks also seems to be more easily absorbed by the market than expected. Many businesses and consumers have gradually adapted to the environment rather than directly giving up. Therefore, investors should maintain a cautiously optimistic attitude, continuing to invest while **adopting a more prudent stock selection strategy**, focusing on valuation levels, balance sheet strength, sustainability of earnings, and exposure to risks from inflation sensitivity shocks.

The risk lies not only in overreacting to market news but also in underreacting to slower structural changes. The Federal Reserve's meeting minutes indicate that **the inflation environment may be more persistent than the market expects.** While AI has enormous potential, it is not without cost. Geopolitical risks have largely been absorbed by the market but have not truly disappeared. Financial stability risks have not raised red flags, but they should not be overlooked.

He pointed out that the importance of the meeting minutes from last week's Federal Open Market Committee (FOMC) lies in the fact that it is the first comprehensive disclosure of the monetary policy debate under Chairman Kevin Warsh's leadership. The meeting minutes also help explain the recent rise in implied policy rates and U.S. Treasury yields.

Many participants still expect inflation to cool as energy prices retreat and the one-time effects of tariffs gradually fade. However, many officials generally believe that inflation levels remain elevated, and the upward risks to price stability cannot be ignored. Some officials pointed out that the pressure of rising prices has become more widespread; at the same time, many mentioned that demand related to artificial intelligence could push up prices for technology products and electricity. This is the most noteworthy part of the meeting minutes, as it contradicts the common view that "technological advancements naturally help to slow inflation in real-time."

**AI represents an infrastructure investment cycle that may bring inflationary pressures before enhancing productivity.**

In the long run, AI may help improve productivity, enhance efficiency, and reduce costs. However, data centers require a significant amount of electricity; the semiconductor industry needs to expand capacity; and the power grid needs upgrades. Additionally, factors such as cooling systems, copper supply, technical labor, financing, and approval processes are also crucial. Therefore, AI is not just a technology theme but is more inclined to be viewed as an infrastructure investment cycle, which often brings inflationary pressures before enhancing productivity. However, the expansion of AI infrastructure is still expected to support earnings expectations, capital expenditures, and the leadership of technology stocks in the stock market.

The FOMC meeting minutes indicate that the U.S. stock market continued to rise during the two meetings, with technology stocks leading the way, primarily benefiting from higher earnings expectations. However, the same AI boom may also bring price pressures in certain areas that central banks cannot ignore. Therefore, the policy challenges facing the Federal Reserve remain daunting. The U.S. labor market has not weakened to the extent that it requires interest rate cuts; on the other hand, inflation is not sufficiently mild to allow for complacency Furthermore, the AI investment boom has made the assumption that "technological progress will inevitably reduce inflation in the short term" more controversial.

**The situation in Iran brings uncertainty, but the market may have become somewhat numb**

Another factor worth noting is the situation in Iran and the Strait of Hormuz. The ceasefire agreement seems to have broken down, which could again lead to rising energy prices and disruptions in trade, thereby pushing up inflation expectations and weakening demand for risk assets. However, so far, the market's response has remained controlled rather than disorderly. Tanker transportation has not been interrupted, oil prices have only recorded moderate increases, and broader risk assets have not yet fully reflected the possibility of structural changes in the market. For a true structural change to occur, the market may need to see signs of long-term disruptions in energy supply, sustained adjustments in inflation expectations, or widespread tightening of financial conditions.

Since March of this year, one insight gained by the market is that as long as conflicts remain within a controllable range or diplomatic avenues still have a chance to play a role, supply chains may be more resilient than the market expects. Similarly, this may also reflect the market's "fatigue effect." Investors seem to have gradually digested the successive shocks of war, inflation, energy supply disruptions, trade tensions, political uncertainty, and high interest rates. Over time, the risk asset market may become somewhat numb to these events.

**The UK financial system remains resilient, continuously supporting the operation of the real economy**

Valuations of risk assets, sovereign debt, and high-risk credit markets still exhibit vulnerabilities, and risks in certain areas have even increased. The leverage levels in the stock market have also risen significantly. However, the overall UK financial system remains resilient and continues to support the operation of the real economy.

The core indicators from the Bank of England show that the credit growth rate for the UK private non-financial corporate sector has risen from 4.1% to 6.5% by the fourth quarter of 2025. Although the UK financial environment is not without pressure, local credit channels have begun to show signs of gradual improvement. The Bank of England has also specifically mentioned the impact of AI on the macro-financial environment, including high valuations, increased concentration of AI-related stocks, rising financing demands, as well as risks related to cybersecurity and operational resilience

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