Zheshang Securities: The Fed's "risk management-style" rate cut, loose expectations may still be subject to reversal.

On September 18, the macro research team of Zheshang Securities published a research report stating that the Federal Reserve lowered interest rates by 25 basis points this month as scheduled, and indicated in the dot plot that there is an expectation for two more rate cuts in the remaining two meetings of the year. However, it is worth noting that Powell pointed out in the post-meeting Q&A that the September rate cut was a "risk management" cut. Zheshang Securities macro research team believes this is one of the most important statements of this meeting. Overall, although the dot plot points to two more rate cuts this year, the Zheshang Securities macro research team believes that there is still a possibility of a reversal in easing expectations. The main reasons are twofold: first, the core momentum of the U.S. economy may shift from consumption to investment, and although non-farm payrolls may decline, a weak non-farm sector does not necessarily mean a weak economy, and inflation resilience may be stronger than expected; second, although non-farm payrolls may decline, the expulsion of illegal immigrants may tighten labor supply, so the unemployment rate may not necessarily rise. If the unemployment rate continues to remain stable, consecutive rate cuts may not necessarily materialize. In addition, it is important to note the possibility of the Fed ending its balance sheet reduction within the year.