Expert: The probability of the Federal Reserve raising interest rates once more this year has increased significantly

Senior Deputy Director of the Research and Development Department at China Chengxin International, Bai Xue, stated on September 18 that the probability of the Federal Reserve raising interest rates once more this year has increased significantly. However, this does not mean the Federal Reserve will begin a cycle of continuous rate hikes. Firstly, while the current US economy shows resilience, there is a clear K-shaped divergence, with issues such as a low household savings rate and declining consumer sustainability gradually emerging. The AI investment cycle may also face marginal weakening. Secondly, long-term US Treasury yields have risen to their highest levels since 2007. The spontaneous tightening of financial conditions has already formed substantial pressure on rate-sensitive sectors, so the Federal Reserve still needs to cautiously assess the accumulated effects of its tightening policies. Furthermore, the core purpose of this rate hike is to anchor inflation expectations and prevent inflation from becoming entrenched again. This is a phased policy adjustment, rather than a systematic tightening in response to economic overheating or a spiral increase in inflation. Currently, US inflation is only experiencing a temporary rebound, without triggering a wage-price spiral, and the fundamentals do not support continuous rate hikes. After the rate hike in September is implemented, if the inflation data in December remains high, there may be another rate hike. After that, the Federal Reserve will enter an observation period, monitoring the progress of inflation returning to target levels at an interest rate of 4.00%—4.25%, before deciding whether to maintain rates, raise them again, or shift towards rate cuts.