This Thursday, the Federal Reserve will announce its December interest rate decision, and CICC expects the Fed to remain calm and maintain interest rates unchanged. Officials may slightly increase their GDP growth forecast for the end of 2023 and slightly lower their overall and core PCE inflation forecasts.
In terms of the chart, the Federal Reserve may continue to suggest two interest rate cuts next year, and the median forecast for interest rates by the end of next year may move down to 4.8% (compared to 5.1% in September). Powell may refute the market's aggressive expectations for a rate cut next year and say that the timing for discussing a rate cut is not yet ripe. At present, the Federal Reserve's monetary policy is in a "comfort zone", and the optimal strategy is to patiently wait for more data, rather than hastily suggesting a shift towards easing.
In addition, the current market has already included a lot of optimistic expectations for interest rate cuts, and the capital market has been "wild" for more than a month. If more dovish signals are released, it may lead to further easing of financial conditions, economic "non landing", and increased risk of secondary inflation, all of which the Federal Reserve is unwilling to see.