PBoC: Inflation Stickiness Delays Fed Rate Cut Timing, Next Rate Cut Expected to Start in the Third Quarter

BlockBeats News, February 13th, China International Capital Corporation (CICC) released a research report pointing out that the core CPI in the U.S. rebounded to 0.4% on a seasonally adjusted monthly basis in January, and rebounded to 3.3% year-on-year. The total CPI rose to 0.5% on a monthly basis, and rose to 3.0% year-on-year, both higher than market expectations.

CICC believes that this inflation rebound is related to various supply disruptions, including: the lagged impact of hurricanes, severe winter weather, California wildfires, egg shortages due to avian flu, and the escalating Trump tariff expectations. It also reflects the seasonal factors of the "January effect." In general, the supply disruptions are temporary, but this time the tariffs are an unknown factor with significant uncertainty. This uncertainty, combined with the resilience of employment, may cause the Fed to remain cautious for a longer period. CICC has postponed its interest rate cut forecast to the third quarter, earlier than the current market expectation of the fourth quarter. (FX678)