【The Federal Reserve will remain cautious in its interest rate decision, with limited rate cuts】
Recently, market expectations for interest rate cuts by the Federal Reserve have risen significantly, but there are clear divisions within the Federal Reserve, with some officials supporting rate cuts while others prefer to wait and see.
Political figures like President Trump and Treasury Secretary Mnuchin continue to pressure for significant rate cuts to stimulate the economy.
However, the core risk facing the U.S. economy is "stagflation-like"—that is, a coexistence of slowing growth and persistent inflation, and simply cutting rates cannot fundamentally resolve this structural contradiction.
The core goal of monetary policy should be to stabilize inflation expectations, rather than pursuing short-term growth or yielding to political pressure.
Given the complex situation of a slowing job market alongside resilient inflation, it is expected that the Federal Reserve will maintain a cautious policy, avoiding aggressive easing, and the uncertainty regarding the future path of monetary policy has significantly increased.
