CICC: The Federal Reserve may only cut interest rates once this year, likely in the fourth quarter
The research report from China International Capital Corporation pointed out that the Federal Reserve maintained the interest rate unchanged at its May meeting, which was in line with expectations. The monetary policy statement acknowledged inflation stickiness, and Powell expressed a lack of confidence in cutting rates, indicating that the threshold for the Fed to cut rates has significantly increased. Powell also ruled out the option of raising rates while announcing that balance sheet reduction will soon slow down, which relieved the market. Overall, we believe that this guidance from Powell is quite reasonable; he did not lead to rate cuts as before, which is correct and good for the market. We maintain our previous judgment: The Fed may only cut rates once this year, likely in the fourth quarter.
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