The agency still does not expect the Federal Reserve to cut interest rates this year, and inflation stickiness remains a key issue

On August 6th, SWBC Chief Investment Officer Chris Brigati said that he remains skeptical about the Federal Reserve cutting interest rates this year. The most likely scenario is that only one rate cut this year, or even zero is more likely. The Federal Reserve maintains a high degree of consistency in policy communication and maintains cautious patience with the decision-making process. This week Trump will have the opportunity to appoint new Federal Reserve governors, which will change the distribution of voting positions within the Federal Reserve.
Mr. Brigati also said that the central reason for his reservations about a rate cut remained the lingering problem of inflation stickiness. The Fed has repeatedly emphasised its strong focus on inflation stickiness. Although it has played down the impact of the jobs data, it seems to have softened recently. But unless there are more clear signs of a worsening labour market, the rate cut will be very limited. The latest non-farm data is a limited indicator for now, but the real concern is that inflation could remain high or even intensify. If the Fed cuts interest rates when inflation remains high or rebounds, it is bound to lead to new policy dilemmas.