--- title: "CITIC Securities: It is expected that the Federal Reserve will cut interest rates once by 25bps in the second half of the year" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/279694986.md" description: "CITIC Securities expects the Federal Reserve to maintain the policy interest rate unchanged at the March 2026 meeting, in line with market expectations. The dot plot indicates a target interest rate midpoint of 3.4% for this year, with upward revisions to inflation and economic growth forecasts, while the unemployment rate forecast remains unchanged. Powell did not make any judgments regarding the situation in Iran and oil prices, and it is expected that the Federal Reserve will not cut interest rates in April, with a baseline scenario of one rate cut of 25bps in the second half of the year" datetime: "2026-03-19T00:50:05.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/279694986.md) - [en](https://longbridge.com/en/news/279694986.md) - [zh-HK](https://longbridge.com/zh-HK/news/279694986.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/279694986.md) | [English](https://longbridge.com/en/news/279694986.md) # CITIC Securities: It is expected that the Federal Reserve will cut interest rates once by 25bps in the second half of the year According to the Zhitong Finance APP, CITIC Securities released a research report stating that the Federal Reserve will maintain its policy interest rate unchanged at the March 2026 meeting, which is in line with market expectations. The dot plot shows that the target interest rate center for this year is 3.4%, consistent with December 2025, while the inflation forecast for this year has been slightly raised, and the economic growth forecast has also been slightly adjusted upward, with the unemployment rate forecast remaining unchanged. It is noteworthy that Powell did not make any judgments regarding the situation in Iran and oil prices as expected, and his confidence in the decline of tariff-induced inflation has weakened further compared to January. It is expected that the Federal Reserve will not cut interest rates in April, and under Walsh's chairmanship, there will be one rate cut of 25bps in the second half of the year under the baseline scenario. Regarding FOMC personnel issues, if the U.S. Department of Justice withdraws its investigation into Powell, Walsh is likely to smoothly pass the Senate appointment process, and Powell will also resign from his board position after his term as chairman ends. The current consensus within the FOMC is not as strong as in the past; whether Powell continues to chair meetings in the short term or Walsh smoothly takes over as chairman, close attention needs to be paid to the speeches of the 12 voting members, as the Federal Reserve's monetary policy path depends more on the balance of votes, while the chairman's personal speeches have less guiding effect on the market compared to the past. ## The main points of CITIC Securities are as follows: **Key points from the March 2026 Federal Reserve meeting statement:** 1. In terms of interest rate tools, the committee decided to keep the target range for the federal funds rate unchanged at 3.5-3.75%, in line with market expectations. This interest rate decision did not receive unanimous agreement, with Milan voting in favor of a 25bps rate cut. 2. Regarding the balance sheet, the Federal Reserve continues to maintain balance sheet stability through reserve management purchases (RMP): all maturing government bonds will be rolled over, and agency assets will be naturally recovered and reinvested in T-bills, while T-bills will be purchased as necessary to supplement reserves, ensuring that they remain at adequate levels. The New York Fed's official website shows that approximately $13.8 billion in reinvestment purchases and about $40 billion in reserve management purchases will be conducted from March 13 to April 13. 3. In terms of economic outlook, existing indicators show that economic activity has been steadily expanding. Employment growth remains slow, and the unemployment rate has changed little in recent months. Inflation remains slightly high. The committee aims to achieve full employment and maintain inflation at the 2% target level in the long term. There is still a high degree of uncertainty regarding the current economic outlook. The impact of developments in the Middle East on the U.S. economy remains unclear. The committee is closely monitoring the risks to its dual mandate. **Changes in the March 2026 Federal Reserve meeting statement compared to the January meeting include:** 1. An adjustment in the wording regarding employment, changing from "the unemployment rate has shown some signs of stabilization" to "the unemployment rate has been little changed in recent months"; 2) An addition regarding geopolitical issues, stating "the implications of developments in the Middle East for the US economy are uncertain." **The current dot plot shows that the target interest rate midpoint for this year is 3.4%, consistent with December 2025, while also raising the U.S. inflation forecast for this year and slightly adjusting the economic growth forecast, maintaining the unemployment rate forecast unchanged.** The dot plot estimates the terminal interest rate for this year at 3.4%, consistent with December 2025, implying a potential 25bps rate cut this year. From the specific votes in the dot plot, there are 7 votes for no rate cut this year, 7 votes for a 25bps cut, 2 votes for a rate between 3-3.25%, 2 votes for a rate between 2.75-3%, and 1 vote for a rate between 2.5-2.75%. Compared to the last dot plot, the concentration has clearly increased this time. In terms of economic forecasts, compared to the December 2025 SEP, the March SEP slightly raised this year's GDP growth forecast from 2.3% to 2.4%; the unemployment rate forecast remains unchanged at 4.4%; the PCE inflation forecast was raised from 2.4% to 2.7%, and the core PCE inflation was raised from 2.5% to 2.7%; the long-term interest rate level forecast was raised from 3.0% to 3.1%. **Powell did not make judgments on the Iranian situation and oil prices as expected, and it is noteworthy that his confidence in the decline of tariff inflation has weakened further compared to January. It is expected that the Federal Reserve will not cut rates in April, and under Walsh's chairmanship, the baseline scenario for the second half of the year is a 25bps rate cut once.** First, regarding the Middle East situation, Powell reiterated the "wait and see" approach, indicating uncertainty about the scale and duration of the impact, mentioning that the traditional view is to "look through" energy shocks. He noted that rising energy prices have led to a slight increase in short-term inflation expectations but distinguished the current situation from the stagflation environment of the 1970s. Second, regarding tariff inflation, Powell stated at the December 2025 meeting that "goods inflation may peak in the first quarter of 2026," but at the January meeting, he indicated that "tariff inflation may peak in the middle of the year," which was the most significant change from the January meeting. At the March meeting, Powell maintained that the impact of tariffs would be fully transmitted by mid-year but mentioned that the improvement in inflation is not as much as previously expected, with rate cuts contingent on inflation improvement ("The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation. It should come as we start to see in the middle of the year, progress on tariffs, you know, going through once and then inflation coming down." and "You know the rate forecast is conditional on the performance of the economy So if we don't see that progress then you won't see the rate cut.") Compared to Powell's responses regarding the situation in the Middle East and oil prices, his confidence about the decline in tariff-induced inflation has weakened further since January, which is noteworthy. Coupled with the upward adjustment of core PCE in the SEP, the significant improvement in inflation decline has become a prerequisite for retaining a rate cut in the dot plot. Third, regarding the two-way movement of interest rates, the minutes from the January FOMC meeting showed that some members believed they supported a "two-sided description" of interest rate decisions to reflect the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains above target levels. Powell stated at this press conference that the vast majority of members do not consider the next rate hike to be the baseline scenario. The "Iran situation - oil price trends - inflation expectations" is filled with uncertainty, and the Federal Reserve needs more patience to observe. Although the February non-farm payroll report was weak, it was partially affected by strikes, weather, and statistical adjustments, and it offset the strong non-farm payroll report from January. It is expected that the Federal Reserve will not cut rates in April, and under Walsh's chairmanship, the baseline scenario for the second half of the year is a rate cut of 25bps once. **Regarding FOMC personnel issues, if the U.S. Department of Justice withdraws its investigation of Powell, Walsh is likely to pass the Senate appointment process smoothly, and Powell will also resign from his position as a governor after his term as chairman ends. The current consensus within the FOMC is not as it once was; whether Powell continues to chair meetings in the short term or Walsh takes over smoothly, close attention needs to be paid to the statements of the 12 voting members in office. The path of the Federal Reserve's monetary policy depends more on the balance of votes among FOMC members, while the guiding role of the chairman's personal remarks on the market has decreased compared to the past.** Trump appointed Walsh to succeed Powell as chairman of the Federal Reserve, but this appointment currently faces resistance in the Senate. Due to the ongoing investigation by the U.S. Department of Justice into Powell, Republican Senator Thom Tillis stated that he would block any Federal Reserve personnel appointments from entering the voting process until the investigation is concluded, which reduces the probability of Walsh's appointment being confirmed before Powell's term expires on May 15. At this press conference, Powell also responded to this issue, stating that if his successor has not been confirmed by the Senate, he will continue to chair the meetings as chair pro tempore until the new chairman is confirmed On March 14th, according to Reuters, Powell's lawyer raised the possibility of Powell continuing to serve as a member of the Federal Reserve Board after his term as chairman ends during communications with the Department of Justice. At this press conference, Powell stated that he has no intention of leaving the Federal Reserve until the Department of Justice investigation is concluded and has not decided how long he will remain at the Federal Reserve. It is reasonable to interpret this event in reverse; if the Department of Justice withdraws its investigation of Powell, then Waller will likely pass the Senate confirmation process smoothly, and Powell will also resign from his board position after his term as chairman ends. Currently, the consensus within the FOMC is not as strong as in the past. Powell has repeatedly mentioned in recent press conferences following interest rate meetings that "each of the 19 members has their own forecasts." Whether Powell temporarily chairs the meeting in the short term or Waller smoothly takes over as chairman, close attention will need to be paid to the statements of the 12 voting members in office. The future path of the Federal Reserve's monetary policy will depend more on the balance of votes among FOMC members, and the chairman's personal remarks have less guiding influence on the market compared to the past. **Risk Factors:** The U.S. labor market weakens more than expected; developments in Iran exceed expectations; Trump's policies exceed expectations; the Federal Reserve adopts a more hawkish stance than expected ### 相關股票 - [Fidelity MSCI Financials Index (FNCL.US)](https://longbridge.com/zh-HK/quote/FNCL.US.md) - [Yinhua CSI All Share Investment Banking & Brokerage ETF (159842.CN)](https://longbridge.com/zh-HK/quote/159842.CN.md) - [CITIC Securities Co., Ltd. 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