BOCOM INTL: It is expected that the Federal Reserve will cut interest rates two to three more times next year.

BOCOM INTL has released a research report stating that the Federal Reserve lowered the benchmark interest rate by 25 basis points yesterday (19th), to a range of 4.25 to 4.5, which is in line with the market and the bank's expectations. Although the US cut interest rates as scheduled, US stocks, US bonds, gold, and other assets all declined significantly, mainly due to the fact that the Federal Reserve's switch from a hawkish stance exceeded market expectations. BOCOM INTL further stated that although the current policy rate level of 4.3% still remains restrictive, the neutral interest rate is rising, bringing the Federal Reserve closer to a neutral stance. At the same time, the uncertainty in the policy of the incoming US President Trump has reduced macroeconomic visibility, leading the Federal Reserve to have a reason to "lightly tap the brakes" on the pace of rate cuts, in order to observe the trends in inflation and economic growth. However, the bank believes that the impact of Trump's policy combination on the inflation path in the short term next year is limited, and with fiscal bias towards tightening, the risks of a significant upside in the US economy during the process of transitioning from tight to neutral rates are limited. The Federal Reserve's policy space may be relatively ample in the first half of next year. The bank expects the US to have two to three more rate cuts next year, potentially skipping the January meeting and cutting rates once each in March and June.