CICC: Milan Lowers the Average Rate Cut in the Dot Plot

Jinse Finance reported that a research report from CICC stated that the core information from this Federal Reserve meeting is: the "risk-controlled" rate cut is moderate and in line with expectations, and the "dot plot" forecasts two more rate cuts within the year, but there are significant differences. 1) On the surface, the "dot plot" predicts two more rate cuts this year, but a closer look at the voting distribution of the 19 committee members shows that 9 expect only one more cut or even fewer, 9 expect two more cuts, and one person expects a further 125bp cut (which is clearly unlikely, and the market speculates this might be Mester). In other words, if it weren't for Mester's extremely low expectation dragging down the average, the "dot plot," which uses the median as the final result, would show that the odds of one or two more cuts this year are basically evenly matched. This aligns with the current futures market, which has priced in over an 80% probability of rate cuts in both October and December. 2) The divergence for 2026 is even greater, and the median only indicates one rate cut, which is significantly less than the probability of three more cuts currently priced in by the futures market. However, since next year involves the replacement of Powell and several other committee members, the market has not overreacted to the path for next year. (Golden Ten Data)