TechFlow, August 19 — According to Jinshi Data, a CICC research report stated, "Recent market pricing has significantly increased expectations for Fed rate cuts, while internal divisions within the Federal Reserve have intensified, with both voices supporting rate cuts and those advocating caution. U.S. President Trump, Treasury Secretary Bessent, and others are also pressuring the Fed to call for substantial interest rate reductions.
However, we believe current conditions do not support aggressive rate cuts. The biggest risk currently facing the U.S. economy is 'quasi-stagflation,' and rate cuts cannot resolve this contradiction. Monetary policy should still focus on stabilizing inflation (expectations), rather than pursuing short-term growth or yielding to political pressure.
Therefore, we expect the Fed will remain cautious in its rate-cut decisions and will not implement significant easing. With slowing employment and persistent inflation coexisting, uncertainty surrounding the monetary policy path will rise substantially."
