On December 11, CICC's latest research report indicated that the Federal Reserve cut interest rates by 25 basis points as expected at the December meeting, but the number of officials opposed to interest rate cuts increased to 2, indicating that the threshold for further interest rate cuts is being raised. At the same time, Powell's statement was not strong, and the Federal Reserve announced that it would launch a short-term treasury note purchase operation, which helped ease market concerns. Expectations of “hawkish interest rate cuts”, which had previously been fully taken into account, have been reversed, increasing market volatility. Looking ahead, given that the economy and employment are still facing downward pressure, we expect the Fed may continue to cut interest rates in 2026; however, considering the persistence of inflation, the pace of interest rate cuts tends to slow down. The military may stand still in January, and the next rate cut may be in March.

On December 11, CICC's latest research report indicated that the Federal Reserve cut interest rates by 25 basis points as expected at the December meeting, but the number of officials opposed to interest rate cuts increased to 2, indicating that the threshold for further interest rate cuts is being raised. At the same time, Powell's statement was not strong, and the Federal Reserve announced that it would launch a short-term treasury note purchase operation, which helped ease market concerns. Expectations of “hawkish interest rate cuts”, which had previously been fully taken into account, have been reversed, increasing market volatility. Looking ahead, given that the economy and employment are still facing downward pressure, we expect the Fed may continue to cut interest rates in 2026; however, considering the persistence of inflation, the pace of interest rate cuts tends to slow down. The military may stand still in January, and the next rate cut may be in March.