Zhongjin: US inflation may drive 'hawkish rate cuts'

Jinshi data, December 12 news, CICC research report said that although the core commodity prices in the United States may be affected by hurricanes and rebound, the increase in house rent has slowed to the lowest level since 2021, easing market concerns about rising inflation. Overall, this inflation data opens the door for the Fed to drop interest rates next week, but we also predict that next week may see a “hawkish rate cut,” and the Fed may cut its guidance on rate cuts in the new dot plot. We predict that the new dot plot will show a total of 2 rate cuts in 2025 (previously 4 times), and the federal funds interest rate may be lowered to a neutral level of 3.75% to 4% by the end of the second quarter of next year.