CICC: The Fed may only cut interest rates once this year, in the fourth quarter

The research report from CITIC Securities pointed out that the Fed's decision to maintain interest rates in May was in line with expectations. The monetary policy statement acknowledged inflation stickiness, and Powell expressed little confidence in interest rate cuts, indicating that the Fed's threshold for interest rate cuts has significantly increased. Powell also denied the option of raising interest rates and announced that the reduction of the balance sheet will slow down, which relieved the market. Overall, we believe that Powell's guidance this time is relatively reasonable. He did not guide interest rate cuts as he did before, which is the correct approach and is also good for the market. We maintain our previous judgment that the Fed may only cut interest rates once this year, and the timing will be in the fourth quarter.