Huatai Securities: Maintain the judgment that the Federal Reserve will cut interest rates for the first time in September and cut interest rates twice this year

According to Odaily Planet Daily, a Huatai Securities research report indicates that July US inflation data indicates a relatively mild pass-through of tariffs on inflation. Research by Cavallo et al. indicates that commodity price increases peak 10-15 weeks (3-4 months) after the announcement of tariffs, indicating a rapid pass-through of tariffs. However, due to weak perceived demand from businesses, only 50-60% of the tariff pressure was passed on to consumers, preventing a more significant increase in inflation. Looking ahead, given the modest increase in US external tariffs in August, we expect tariffs to continue to modestly push up core inflation. However, weak business demand and a weakening job market will constrain the extent of inflation. Slowing demand and accelerated deportations of illegal immigrants mean the job market will remain under pressure in the third quarter. Therefore, we maintain our forecast for the first interest rate cut in September, marking the second rate cut this year. (Jinshi)