Federal Reserve "Holds Steady" Experts: Rate Cut May Be Delayed Until June or Later

How does high oil prices influence expectations for the timing of interest rate cuts?

【Homebody Finance | Expert Face-to-Face】 On March 19, Beijing time, the Federal Reserve announced that the federal funds rate target range remains unchanged at 3.50%-3.75%.

Yang Delong, Chief Economist at Qianhai Open Source Fund, told Homebody Finance that the decision to keep rates steady at the March FOMC meeting aligns with market expectations. Due to ongoing Middle East conflicts in March, global oil prices surged, with international oil prices reaching as high as $119 per barrel. The Fed’s primary monetary policy goal is to combat inflation, which has led to a delay in the rate cut cycle.

Yang Delong said that the next Fed chair nominee, Kevin Woor, might choose to cut rates in June. However, if the Middle East conflict continues and international oil prices remain high for an extended period, the rate cut could be postponed to September or even December. Some analysts also expect that rate cuts may not happen at all this year.

“The impact of the Middle East conflict on the market is gradually being absorbed. This slow and prolonged bull market will continue further. Investors can focus on the two main investment themes: ‘Technology + Resources,’” he believes. He also noted that the Fed not cutting rates has little effect on international gold prices, as the market has already fully priced in this expectation. Therefore, gold prices are likely to fluctuate around $5,000 per ounce. In the long term, under the trend of de-dollarization, the upward trend of international gold prices remains unchanged, and international oil prices will also stay at high levels.

(The views expressed are for reference only and do not constitute investment advice. Investing involves risks; please proceed with caution.)

(Produced by Zhang Ning, Edited by Dong Xiangyi, Zheng Zheng, Homebody Finance Production)