The "last mile" problem of inflation reappears, and the central banks of Europe and the United States will only slowly cut interest rates in 2025?

The inflation issue is "more tricky" than expected, as central banks in Europe and the United States announce a slowdown in interest rate cuts. On Wednesday local time, the Federal Reserve cut interest rates by 25 basis points as scheduled, but Chairman Powell leaned dovish at the post-meeting press conference, mentioning four times that the Fed's policy remains "significantly restrictive," and disagreed with the view that "the federal funds rate is close to neutral." On Thursday, the Bank of England kept interest rates unchanged, while expecting inflation to continue to rise in the short term, stating that policy still needs to "remain restrictive for a sufficiently long time," and that a "gradual" path of interest rate cuts is reasonable. Analysts have stated that the main reason for the slowdown in interest rate cuts by the central banks of the UK and the US is the signs of rising local inflation, and the policies of the newly elected President Trump in the US have yet to be finalized, adding uncertainty to the global economy and inflation outlook. Public data shows that the year-on-year growth rate of the US PCE price index rebounded for two consecutive months, reaching 2.8%, while the UK's CPI inflation jumped from 1.7% in September to 2.6%, exceeding the 2% target level. Concerns about inflation and the outlook for interest rate cuts have driven sell-offs in the US and UK bond markets in recent weeks. This week, the yield on the US 10-year Treasury bond reached its highest point since May at 4.59%. The yield on the UK 10-year Treasury bond also rose to 4.66%, the highest level in over a year. Andrew Pease, Chief Investment Strategist at Russell Investments, stated: "What investors are now worried about is that unless inflation falls completely, the pace of monetary policy easing will slow significantly." In recent weeks, investors have been reducing their bets on the extent of interest rate cuts. Currently, traders expect the Federal Reserve to cut rates once next year, with a 50% chance of a second cut, down from expectations of two cuts a month ago; the Bank of England is expected to cut rates twice next year, a reduction from the four cuts anticipated in October.