CICC: The Federal Reserve may only cut interest rates once this year, in the fourth quarter

According to the research report of China International Capital Corporation, the real GDP of the United States in the first quarter of 2024 will be 1.6% year-on-year, which is lower than the 2.4% expected by the market and lower than the 3.4% in the fourth quarter of last year. The agency believes that the GDP report is not as weak as it seems, because consumer spending and fixed asset investment, which represent domestic demand, are still solid, and the low GDP is dragged down by the high increase in imports. But the increase in imports instead indicates that demand is not bad, and domestic supply cannot meet demand, so overseas supply is needed to meet it, which is consistent with the characteristics of the US economy since the epidemic. More crucial than the GDP data is the rebound of core PCE inflation in the first quarter, which is the biggest hidden danger of the market. Flexible inflation will raise the threshold for the Federal Reserve to cut interest rates, allowing the US dollar interest rate to stay at a high level for longer. The agency reiterated its previous judgment that the Federal Reserve may only cut interest rates once this year, in the fourth quarter.