CITIC Securities: Still Expects the Fed to Raise Interest Rates by 25 Basis Points in December

On October 29, CITIC Securities noted in a research report that the Federal Reserve held rates steady as expected in October, with the statement’s wording reflecting greater optimism toward the pace of economic expansion and offering more prudent guidance on the policy stance. Williams’ post-meeting remarks were softer compared to September, noting that credit conditions have tightened and inflation expectations are moving in the right direction, while also announcing planned adjustments to the FOMC meeting schedule for the next two years. We still expect the Fed to raise rates by another 25bps in December, suggesting the terminal rate for this tightening cycle may not be far from current levels. New variables in the Middle East situation are insufficient to provide a clear and long-term exit path for both the US and Iran, high oil prices may persist until the situation becomes clear, and further improvement in dollar liquidity will require new catalysts. (Jinshi)