Potential Fed Rate Cut Linked to Tariff Reductions

According to Odaily, a report from China International Capital Corporation suggests that if tariffs are further downgraded, the Federal Reserve may consider a rate cut. Despite current growth pressures not being evident, with strong April non-farm payrolls and resilient ISM manufacturing and services PMI, the Fed lacks sufficient reason for a preemptive response. Moreover, with Fed Chair Jerome Powell's term ending in May next year, the risks of premature action are significant. Therefore, the Fed is likely to adopt a wait-and-see approach in balancing inflation and growth challenges, rather than acting proactively. However, if tariff risks are further reduced, the Fed might have the opportunity to cut rates in the third or fourth quarter to alleviate growth pressures at that time.