Oxford Economics CEO: Fed may start cutting interest rates in September

Adrian Cooper, CEO and chief economist at Oxford Economics, said: "Our expectation is that the Fed will start cutting rates in the second half of this year, perhaps in September. But much will depend on what happens to underlying inflation, especially relative to wage growth. The rapid rise in labor inflation expectations over the past few years has surprised the Fed and many central banks. This means that labor is not only seeking wage increases to make up for past higher-than-expected inflation, but also because they believe that inflation is likely to remain high. I think the Fed wants to see decisive evidence that the process of slowing inflation will continue, not only headline inflation, but also core inflation will return to normal. 2% level before really being ready for a big rate cut. Many people believe that tight monetary policy will lead to a significant slowdown in US economic growth, but as interest rates rise, the United States introduced major fiscal stimulus measures last year, such as the Inflation Reduction Act and the CHIP Act, which largely offset the impact of US interest rate hikes. In addition, US consumers also continued to spend excess savings last year. Although this process may be over now, I think the US economy is still healthy and it is unlikely to see a big adjustment in the US economy. The United States seems to be achieving a soft landing. This allows the Fed to be cautious with monetary policy and take its time to make decisions on rate cuts. The US labor market is still quite healthy, and business investment is also quite healthy, driven by various tax measures and new technologies. "(Yicai)