CICC: The Federal Reserve is not in a hurry to cut interest rates in March

ChainCatcher news, according to Tonghuashun, a research report from China International Capital Corporation indicates that the Federal Reserve's January meeting kept the policy interest rate unchanged, which is in line with expectations. The monetary policy statement suggests that officials still lack confidence in inflation returning to the 2% target, thus they wish to retain flexibility rather than rush to cut rates in March. We believe that the recent strong economic data, along with supply chain risks caused by disruptions in Red Sea shipping, are the main reasons for the Federal Reserve's caution.

If the economic fundamentals remain strong and supply risks have not been completely resolved, the risk of inflationary pressures re-emerging cannot be ignored. Our expected baseline scenario is still that the Federal Reserve may cut rates in the second quarter, but the extent of rate cuts for the entire year may not be as much as the market predicts.