BOCOM INTL: The Federal Reserve may only have one rate cut this year, and the possibility of not cutting rates still exists

According to the Zhitong Finance APP, BOCOM INTL released a research report stating that, overall, it maintains the previous view that the Federal Reserve's resumption of interest rate cuts in September does not indicate the beginning of a continuous rate-cutting cycle. After the neutral interest rate rises to around 3%, the current space for rate cuts is only 4-5 times. Although the interest rate futures market and mainstream forecasting websites still indicate that there may be a rate cut in October and December, the bank believes that caution is still needed regarding rate cut expectations, especially since the current U.S. economy remains resilient and the short-term inflationary pressure still poses significant risks. If there is no unexpected downturn in the labor market, the bank believes that there may only be one rate cut this year, and the possibility of no rate cuts still exists.

At the September FOMC meeting, the Federal Reserve cut rates by 25 basis points to a range of 4.00%-4.25%. The bank believes that this rate cut is still a typical preventive measure: unlike last September, when the U.S. labor market deteriorated sharply, triggering a significant rate cut due to the "Sam Rule," the current labor market, although slowing, is generally manageable, and the restrictive nature of the policy rate has significantly eased compared to last year. At the same time, the current cooling of employment mainly stems from a weak supply-demand balance caused by restrictive immigration policies, and the low unemployment rate reflects more of a "weak equilibrium," making it difficult for significant rate cuts to lead to a rapid improvement in the job market