Analysis: The Federal Reserve is expected to cut interest rates at this meeting, and may subsequently "not need further rate cuts".

On December 10, Andrzej Skiba, head of U.S. fixed income at RBC Global Asset Management, said the Federal Reserve might cut interest rates at this meeting, but the momentum of the U.S. economy might mean "no need for further rate cuts." The bank's base case is a rate cut, but it's likely to be a hawkish one, potentially hinting at a subsequent pause in rate hikes. Skiba said, "In our view, inflation and labor market data should prompt the Fed to hold rates steady for now after several cuts, and reassess the situation early next year based on economic developments."

Market participants will be closely watching dissenting committee members, including those advocating for larger rate cuts and those who believe the US economy does not currently require such cuts. In our view, following this rate cut, with our expectation of accelerated US economic growth in 2026, the need for further rate cuts may no longer exist. For political reasons (such as a change in Fed leadership in May), we might see one more rate cut, but the economy itself may not require further cuts for the foreseeable future. (Jinshi)