Tomorrow's Tone: Hawkish Rate Cuts

Focus:

1. Neutral interest rate, how many more rate cuts, expected two times

2. Dot plot, September SEP shows only one rate cut in 26 years, with a 10 to 9 internal vote in the Fed. This time, I think the best scenario is 10 to 9, slightly worse is 11 to 8, or 12 to 7, with most people believing there will only be one rate cut in 26 years.

Currently, the market expects two rate cuts in 26 years, and there will be slight adjustments after the dot plot is released. However, considering the new chair's attitude after taking office and discussions about changing Fed members with Bessen, the impact of the dot plot will be reduced.

The last rate cut during Grandpa Powell's era has come to a perfect conclusion. If there is another rate cut during his term, the issues in the labor market could become significant, and this risk is indeed increasing.