TechFlow, on December 19, CITIC Securities stated that the Federal Reserve cut interest rates by 25bps at its December 2024 meeting, in line with market expectations. The dot plot indicates a projected target rate median of 3.9% for next year, higher than the 3.4% indicated at the September 2024 meeting. The Fed also raised its inflation and economic growth forecasts for next year while lowering its unemployment rate forecast.
Chairman Powell did not provide clear guidance on the "extent and timing" of future rate cuts but expressed strong confidence in economic growth. Based on the Summary of Economic Projections (SEP) and Powell’s remarks, the Fed has evident concerns about inflation next year. This meeting was significantly more hawkish than the general market expectation, though consistent with our view that the Fed will cut rates twice in 2025. We maintain this outlook and expect the Fed will likely pause rate cuts at the next meeting to assess conditions, possibly waiting until the March meeting to offer clearer guidance. Volatility in the U.S. stock market is expected to increase. (Jinshi)
