CICC: Lowers forecast for Fed rate cut to one this year

Zhongjin Research suggests that the pace of US inflation has slowed down this year, while the labor market remains strong, consumer spending is steady, and real estate and manufacturing are rebounding. At the same time, financial conditions remain loose, corporate financing costs have declined, and the stock market's impressive performance supports the expansion of household wealth. From an economic fundamental perspective, the urgency and necessity of the Federal Reserve's interest rate cuts have decreased. It may be difficult for the Fed to follow its guidance of three rate cuts this year, so we have lowered our forecast for the number of rate cuts to one, and the timing of the rate cut may be pushed back to the fourth quarter. However, this year is an election year, and non-economic factors are difficult to predict, so the risk of forecasting lies in the possibility that the Fed may cut interest rates earlier due to these factors. But history has shown that doing so can easily trigger "second inflation," adding complexity to subsequent economic and policy trends.