CICC said it still maintains its baseline view that the Federal Reserve will not raise interest rates this year, but warned that the threshold for a hike has already declined.
According to Jin10, a CICC research note said U.S. CPI in June fell 0.4% month over month on a seasonally adjusted basis, while the year-over-year increase eased to 3.5%. Core CPI was flat month over month and rose 2.6% year over year, with both readings below market expectations.
CICC said the decline in energy prices was the primary reason inflation cooled. Looking ahead, it said the renewed escalation in U.S.-Iran tensions could make the outlook for energy inflation prone to reversals.
The note also said the inflationary effects of AI are gradually becoming more apparent. It cited potential upstream hardware supply-demand mismatches, price increases for software and peripheral products, and AI capital expenditure boosting overall demand as factors that could make core inflation more sticky.
On policy, CICC said June’s inflation cooling supports the Fed keeping rates unchanged at its July meeting. However, it said recent remarks by Fed Governor Christopher Waller indicate the Fed is reassessing the possibility of “preventive rate hikes.”
CICC reiterated its baseline call for no rate hikes this year, but said that if one or two overheating inflation readings emerge, the Fed could be prompted to further discuss the option of raising rates.
AI TRENDS | CICC Maintains View That the Fed Will Not Raise Rates This Year but Says the Hurdle Has Fallen
2026-07-15 00:23:11
Disclaimer:
1. The information provided does not constitute investment advice. Investors should make independent decisions and bear all risks themselves.
2. The copyright of this content belongs to the original author. The views expressed herein are solely those of the author and do not represent the stance or position of this website.
