TechFlow, August 26 — CICC's latest research report indicates that the market should not overinterpret Fed Chair Powell's "dovish" remarks at the Jackson Hole conference. The report argues that Powell did not provide strong guidance on the continuity or magnitude of rate cuts, but merely clarified the Fed's "reaction function"—leaning toward rate cuts when employment risks outweigh inflation risks.
Against the backdrop of higher U.S. tariffs and tightening immigration policies, both employment and inflation risks coexist. If inflation risks surpass employment concerns, the Fed may halt rate cuts. Even a 25-basis-point cut in September would not necessarily signal the start of a sustained easing cycle. CICC warns that if "stagflation-like" pressures intensify, the Fed will face a dilemma, potentially amplifying market volatility.
