CICC: If tariffs are further reduced, the Federal Reserve may cut interest rates

Odaily News CICC research report said that if tariffs are further downgraded, the Fed may be expected to cut interest rates. The current growth pressure has not been reflected. The April non-farm payrolls are still strong, and the ISM manufacturing and service PMIs have also remained resilient. Even if the Fed wants to react preventively, there is no sufficient reason, not to mention that Powell's term will end in May next year, and the risk of overreacting is also very high. Therefore, in the "dilemma" of balancing inflation and growth, the Fed is more likely to choose to wait and see rather than "preemptively strike." However, if the subsequent tariff risks can be further downgraded, the Fed will have the opportunity to cut interest rates again in the third and fourth quarters to ease the growth pressure at that time. (Jinshi)