CICC: The risk of interest rate increase is greater than the risk of decrease after Trump's election

ChainCatcher message, CICC research report points out that by mid-2025, U.S. inflation and economic data may gradually recover, and the pace of interest rate cuts may gradually stop. With Trump's election, the risk of interest rate increases is greater than the risk of decreases, and a 100bps rate cut may be an appropriate magnitude.

The market's expectations for the future path of interest rate cuts are currently experiencing a swing from one extreme to another, influenced by recent economic data, especially after the election. In terms of rhythm, inflation and economic data may gradually rebound by mid-2025, leading to a gradual halt in interest rate cuts.

CICC estimates that inflation in the fourth quarter of this year will show a year-on-year increase due to base effects, but driven by the decline in rents, inflation and core inflation are unlikely to face significant pressure in the first quarter of 2025. In terms of magnitude, a rate cut to around 3.5% is a reasonable level.