CICC: The Federal Reserve should theoretically cut rates twice, but the actual decision depends on oil prices and Trump's cooperation.

Golden Ten Data reported on April 30 that a research note from CICC stated that, from a fundamental theoretical perspective, the Federal Reserve should still and needs to cut interest rates about two times. This is one of the reasons why we are more optimistic about rate cuts than the market. As long as oil prices do not stay above $100 until the end of the year and a high base effect brings inflation down, it will create room for the Federal Reserve to cut rates. However, in practice, cooperation from oil prices and Trump is needed. Persistently high oil prices due to the stalemate in Iran and the Federal Reserve's division caused by Powell's reluctance to step down over investigation concerns are not issues that Walsh can solve alone after taking over in June. The key lies with Trump—if a compromise is reached quickly and the investigation into Powell is completely ended, the prospects for interest rate cuts will gradually open up.