Inflation at 3% isn't the problem — it's the expectation that interest rates will soon fall, asset manager says

• Markets are too optimistic about the prospect of rate cuts, SEI's James Solloway told MarketWatch.
• Inflation is still above the Fed's 2% target, while the labor market also remains strong.
• This means interest rates are likely to stay at higher levels for longer.

Markets are far too optimistic about the prospects of interest rate cuts — because inflation is still above the Federal Reserve's target, an asset manager told MarketWatch.