BOCOM INTL: The possibility of the Fed cutting interest rates only once this year remains, and there is still a scenario where interest rates may not be cut.

BOCOM International released a research report stating that overall, it maintains its previous view that the Federal Reserve's rate cut in September does not mean the start of a continuous rate-cutting cycle. After the neutral interest rate rises to around 3%, there is only room for 4-5 rate cuts. Although interest rate futures markets and mainstream forecasting websites still show the possibility of rate cuts in October and December, the bank believes that caution is still needed regarding rate cut expectations, especially since the U.S. economy still shows resilience and there is still significant upward pressure on short-term inflation risks. Unless there is an unexpected downturn in the labor market, the bank believes that there may only be one rate cut before the end of the year, and the possibility of not cutting interest rates still exists. The Federal Reserve lowered rates by 25 basis points to a range of 4.00%-4.25% in its September FOMC meeting, and the bank believes that this rate cut is still a typical precautionary measure: Unlike in September of the previous year, when a sharp deterioration in the U.S. labor market even triggered a significant rate cut under the "Samuel rule," the current labor market, although showing signs of slowing down, is overall manageable, and the restrictive nature of policy rates has significantly eased compared to the previous year. At the same time, the current cooling of employment is mainly due to a weak supply-demand situation caused by restrictive immigration policies, and the low unemployment rate is more a reflection of a "weak balance," making it difficult for a significant rate cut to bring about rapid improvement in the job market.