China International Capital Corporation: Fed Rate Hikes Are Not Over, But No Need to Act Hastily

格隆汇 October 29th｜According to a research report by CICC, the Federal Reserve kept its policy unchanged in October, with policymakers maintaining a firm anti-inflation stance, but also believing that policy can remain patient. Some hawkish officials have moved to a wait-and-see position, indicating that the urgency for consecutive rate hikes has diminished. Since the rate hike in September, US financial conditions have marginally tightened, inflation premium has eased, and the Federal Reserve can wait for the policy effect to become more apparent. Looking ahead, we expect one more rate hike in December, followed by continued observation. This round of interest rate hikes is more likely to be moderate and gradual rather than aggressively tightening. In addition, Waller announced a reduction in the frequency of interest rate voting starting next year, with some meetings dedicated specifically to discussing long-term monetary policy strategies, continuing his push for reforming the Federal Reserve’s policy framework since taking office. For the market, the risk of the Federal Reserve tightening policy beyond expectations has decreased in the short term, while a relatively tight monetary stance is likely to be maintained in the medium term.