Apollo Economist Warns Fed Inflation Fight Not Complete Amid Market Optimism

This analysis is based on the CNBC interview with Torsten Slok, Apollo Global Management Chief Economist, published on November 14, 2025, where he discussed Federal Reserve policy and inflation concerns [0].

Slok’s statement that “the majority of Fed feels that we’re not quite done fighting inflation” [0] highlights a significant divergence between market expectations and Federal Reserve sentiment. While markets have priced in four 25-basis-point rate cuts for 2025, Apollo’s research suggests the Fed will lower rates “at a slower pace than the market expects” [1]. This disconnect creates potential market volatility if policy reality diverges from current market pricing.

The Fed’s cautious stance emerges despite strong economic indicators, with major indices showing robust performance on November 14: S&P 500 (+1.26%), NASDAQ (+1.94%), and Dow Jones (+0.14%) [0]. However, policymakers are operating with limited government data due to an ongoing shutdown, though Atlanta Fed President Raphael Bostic emphasized they are “not flying blind” with alternative data sources [2]. This data constraint may contribute to the Fed’s conservative approach.

The market’s mixed sector performance on November 14 reflects investor differentiation: Technology (+2.65%) and Utilities (+4.14%) led gains, while Communication Services underperformed (-2.01%) [0]. This divergence suggests investors are positioning for varying sensitivities to interest rate expectations and inflation outlooks across industries, with Financial Services (+1.83%) potentially benefiting from a “higher for longer” rate environment [1].

Apollo’s 2025 outlook, titled “Firing on All Cylinders,” presents a nuanced view where economic strength coexists with persistent inflation concerns [1]. Slok’s perspective reflects this balance, acknowledging economic resilience while emphasizing inflation challenges. The firm’s forecast of a 4.0% fed funds rate by year-end 2025, compared to the current 4.5%-4.75% range, suggests gradual easing rather than aggressive cuts [1].

Goldman Sachs Research maintains that a December rate cut remains “quite likely” [3], creating a complex policy landscape where near-term cuts may occur but the overall easing path remains constrained. This suggests investors should differentiate between short-term policy adjustments and the medium-term “higher for longer” trajectory that Apollo emphasizes [1].

While specific inflation metrics weren’t detailed in the interview, Apollo’s outlook indicates that employment strength and consumer spending continue to support price pressures [1]. The Fed’s focus on inflation completion suggests concerns about underlying price dynamics that may not be fully captured in headline numbers.

• Policy Disappointment
  : If the Fed delivers fewer cuts than markets expect, equity markets may face correction pressure, particularly in rate-sensitive sectors
• Data Uncertainty
  : Limited government economic data during the shutdown could lead to policy missteps or unexpected market reactions
• Inflation Persistence
  : If inflation remains stubbornly above the 2% target, the Fed may maintain higher rates longer than anticipated

• Sector Rotation
  : The divergent sector performance suggests opportunities in rate-sensitive industries like Financial Services and Utilities [0]
• Fixed Income Positioning
  : Higher rates for longer could benefit short-duration strategies and inflation-protected securities
• Quality Growth
  : Technology’s strong performance (+2.65%) indicates continued appetite for quality growth companies with pricing power [0]

• Current fed funds rate: 4.5% to 4.75% [1]
• Apollo’s year-end 2025 target: 4.0% [1]
• Market expectation: Four 25-basis-point cuts in 2025 [1]
• Next decision: December 2025 meeting, with Goldman Sachs forecasting a cut as “quite likely” [3]

• November 14, 2025: Strong equity performance across major indices [0]
• Sector leaders: Technology (+2.65%), Utilities (+4.14%), Financial Services (+1.83%) [0]
• Treasury yields: 10-year at 1.87% as of November 12, 2025 [2]

• Manages approximately $650 billion in assets, providing substantial research influence [1]
• Forecasts “interest rates staying higher for longer on a relative basis” [1]
• Expects US economy to remain strong but with persistent inflation concerns [1]