CICC: We maintain our baseline forecast that the Fed will not raise interest rates this year, but the threshold for a rate hike has already been lowered.

Svmuu News CICC: According to a research report, the U.S. CPI for June fell 0.4% month-over-month on a seasonally adjusted basis, while the year-over-year increase slowed to 3.5%; core CPI showed zero month-over-month growth and rose 2.6% year-over-year, with both figures falling short of market expectations. Falling energy prices were the primary driver behind the cooling of inflation.Looking ahead, tensions between the U.S. and Iran have escalated once again, and the outlook for energy inflation remains volatile. At the same time, the inflationary effects of AI are gradually becoming apparent; supply-demand imbalances in upstream hardware, price increases for software and related products, and AI capital expenditures driving aggregate demand could all make core inflation more persistent.
In terms of policy, the cooling of inflation in June supports the Federal Reserve’s decision to keep interest rates unchanged at its July meeting, but Waller’s recent remarks indicate that the Fed is reassessing the possibility of “preemptive rate hikes.”We maintain our baseline forecast of no rate hikes this year, but note that the threshold for a rate hike has already lowered. Even just one or two instances of overheated inflation data could prompt the Fed to further discuss rate hike options. (Jin Shi)