Pacific Investment Management Co.’s two largest U.S. funds have loaded up on inflation-linked bonds as the firm makes a macro call for a near-term jump in the consumer price index.

The $132 billion Pimco Income Fund’s holdings of Treasury inflation protected securities increased to $4.9 billion as of Sept. 30 from $2.7 billion at midyear, according to data on the firm’s website. The $67 billion Pimco Total Return’s TIPS position rose to $6 billion from $1.2 billion as of Dec. 31 as the firm began buying earlier in the year.

The Newport Beach, California-based bond giant has long been a proponent of TIPS, saying market mispricing for the debt can produce bargains. Pimco is doubling down on the asset class while forecasting that the Federal Reserve will prioritize economic growth over inflation concerns.

“Deflationary pressures may diminish or even reverse going forward, causing overall inflation to break out of its flat trend,” Pimco wrote in a forecast distributed this week. With markets “still largely complacent about inflation prospects,” hedging with TIPS remains “affordable.”

U.S. core consumer price index inflation will accelerate to about 2.5% over several months as companies increasingly pass on the costs of tariffs on Chinese goods to the public, Pimco said in the paper, written by David Brhel, Daniel He and Georgi Popov. The core CPI, which excludes volatile food and energy costs, rose 0.2% for a second month and 2.3% from a year earlier, a Labor Department report showed Wednesday.

TIPS muted gains for some Pimco funds last quarter by returning 1.35%, compared with 2.73% for nominal Treasuries. Slowing growth and rising recession risks weighed on inflation expectations and contributed to declining break-even rates, a measure that equals the difference between the yields on a nominal and inflation-linked bond of the same maturity.

Pimco Income’s investment in TIPS rose to 3.8% of net assets in the third quarter from 2.3%, according to the firm’s data. Pimco Total Return’s holding climbed to 8.8% from 1.8% at the end of last year.

Agnes Crane, a spokeswoman for Pimco, declined to comment.