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

The research report of China International Capital Corporation pointed out that the Federal Reserve maintained interest rates unchanged at its May meeting, which was in line with expectations. The monetary policy statement acknowledged the stickiness of inflation, and Powell expressed a lack of confidence in interest rate cuts, indicating that the Federal Reserve's threshold for interest rate cuts has been significantly raised. Powell also rejected the option of interest rate hikes, and announced that the balance sheet reduction is about to decelerate, which relieved the market. Overall, we believe that Powell's guidance this time is relatively reasonable. He did not guide interest rate cuts as before, which is the right approach and a good thing for the market. We maintain our previous judgment that the Federal Reserve may only cut interest rates once this year, and the time point is in the fourth quarter.