Huatai Securities: Maintains Forecast of Two Fed Rate Cuts in September and December

Odaily Planet Daily News: Huatai Securities stated that looking ahead, tariff transmission may further push up core goods inflation. However, considering that the job market may slow down in the future, we maintain our forecast that the Federal Reserve will cut rates twice, in September and December. June CPI data shows that inflation for goods with high import dependence has already rebounded, disproving the claim that overseas exporters lower prices and tariffs are not passed on. Given that the weighted average U.S. import tariff rate was only 8.7% in May, and some companies have delayed price transmission by depleting inventories, we expect that the impact of tariffs on inflation will become more apparent going forward, potentially pushing up U.S. inflation in the short term. A New York Fed survey also confirms that 88% of manufacturing companies and 82% of service companies choose to pass tariffs on to consumers within three months. At the June FOMC press conference, Powell stated that the Fed needs to observe the impact of tariffs over the summer, and the rebound in inflation may already be within the Fed’s expectations. (Jin10)