CICC: The possibility of a soft landing of the US economy in the short term will further increase
According to the ChainCatcher message, the research report of China International Capital Corporation (CICC) points out that from the perspective of the interest rate decision, the Federal Reserve has taken a more aggressive 50 basis point rate cut, which is more aggressive than we expected. The monetary policy statement indicates that the recent inflation data has given the decision-makers more confidence in achieving the 2% inflation target. The Federal Reserve's actions show that its reaction function has completely shifted from focusing on inflation to focusing on employment. We believe this is a signal that the Federal Reserve has a very low tolerance for rising unemployment, and officials do not want to take the risk of disrupting the prospect of a "soft landing". Based on Powell's statement, we believe that any unemployment rate above 4.4% in the future is likely to trigger further rate cuts. This also indicates that the Federal Reserve will maintain a "dovish" stance until the employment market data stabilizes. Looking ahead, due to the Federal Reserve's more aggressive rate cuts, the possibility of a soft economic landing in the short term will further increase.
