GF Macro: Maintain the judgment that the Fed started to cut interest rates in the second quarter, but the rate cuts for the whole year are relatively cautious

Huitong Financial News GF macro analysts said: In combination, the US CPI and non-farm payrolls data in January exceeded expectations, corresponding to Powell’s “60 Minutes” program said that the probability of a rate cut in March is very low. Market expectations for the timing and magnitude of interest rate cuts will weaken. However, the reminder here is that the threshold for the Fed to cut interest rates precautionarily is not high, and Powell also mentioned that the Fed just needs to see more good data (“good data”), not better data (“better”), that is, as long as inflation can continue to fall, the Fed can start cutting interest rates. Therefore, we maintain the judgment that interest rate cuts will start in the second quarter, but the rate cuts will be relatively cautious for the whole year.