Federal Reserve Faces Challenges in Cutting Rates Amid Inflation Concerns

The Federal Reserve may encounter difficulties in reducing interest rates further this year, according to CICC. The baseline scenario suggests that U.S. PCE inflation will remain above 3.5%, with core PCE exceeding 3%. According to NS3.AI, repeated inflation surprises on the upside, a stable job market, and ongoing energy price risks due to the effectively closed Strait of Hormuz contribute to a more cautious policy approach.