Cathay United Bank: Fed May Cut Rates in Q4 if Supply-Side Shocks Ease

Q: What are the key facts in this article?

Cathay United Bank predicts that the U.S. Federal Reserve (Fed) may begin cutting interest rates in the fourth quarter of this year if supply-side shocks ease. However, due to the Middle East situation and inflationary pressures from high oil prices, short-term policy will remain cautious.

Q: What is the direct answer?

Cathay United Bank predicts that the U.S. Federal Reserve (Fed) may begin cutting interest rates in the fourth quarter of this year if supply-side shocks ease. However, due to the Middle East situation and inflationary pressures from high oil prices, short-term policy will remain cautious.

Q: What is the source and date?

Source: https://www.cna.com.tw/news/afe/202604300398.aspx | Date: Date unavailable

Central News Agency (Central News Agency reporter Su Ssu-yun, Taipei, 30th) Following the U.S. Federal Reserve's decision to keep interest rates unchanged, Cathay United Bank stated today that due to the stalemate in U.S.-Iran diplomatic mediation and inflationary pressures from high oil prices, the Fed will maintain a wait-and-see approach in the short term. However, if future supply-side shocks gradually ease, accompanied by a cooling labor market and slowing wage growth, the Fed is still expected to have an opportunity to initiate interest rate cuts in the fourth quarter of this year, though the overall policy pace will be cautious. The U.S. Federal Reserve (Fed) today decided to keep interest rates unchanged, maintaining the federal funds rate in the range of 3.5% to 3.75%. Regarding the decision-making process, the meeting passed the resolution to maintain interest rates with 8 votes (for maintaining rates) to 4 votes (against). Looking ahead at future interest rate policies, Cathay United Bank analyzed that due to the stalemate in U.S.-Iran diplomatic mediation and inflationary pressures from high oil prices, the Fed will maintain a wait-and-see approach in the short term. If future supply-side shocks gradually ease, accompanied by a cooling labor market and slowing wage growth, the Fed is still expected to have an opportunity to initiate interest rate cuts in the fourth quarter, but the overall policy pace will be cautious. Regarding future macroeconomic performance, Cathay United Bank stated that high oil prices lead to increased raw material and transportation costs. If the recovery of the Strait of Hormuz is slow, it will subsequently lead to a compression of disposable income for the public and corporate profits. On the other hand, the continued expansion of capital expenditure in the technology industry still provides support for economic momentum. Overall, inflation gradually has an upside risk, while economic growth gradually has a downside risk. For t

Cathay United Bank: Fed May Cut Rates in Q4 if Supply-Side Shocks Ease

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