CITIC Securities predicts no Fed rate hikes this year or next, citing political constraints and easing energy inflation pressures.
CITIC Securities expects the Federal Reserve to hold interest rates at 3.5%-3.75% through 2026, diverging from market expectations of an October hike. The call hinges on political constraints and easing energy-driven inflation as the US-Iran memorandum of understanding takes effect.
The Fed’s June meeting removed forward guidance, shifting market focus to incoming data like CPI and payrolls. A roughly 50-50 split among FOMC members on a 2024 hike adds uncertainty, though CITIC argues the committee may align with Chair Warsh’s cautious stance.
White House political dynamics further complicate the outlook, as a rate hike could risk friction with the administration. CITIC’s forecast assumes geopolitical premiums in oil will continue unwinding, weakening the case for tighter policy.