Fed Rate Cut Tied to Tariff Reductions: Potential for Action Next Year

A potential easing of tariffs could lead to a Federal Reserve rate cut, according to a report from China International Capital Corporation. Despite current economic pressures not being apparent, strong non-farm payrolls and resilient manufacturing and services PMI data suggest that the Fed lacks a compelling reason to act preemptively. However, if there are further tariff reductions, the Fed may choose a wait-and-see approach, balancing inflation and growth challenges, rather than taking action sooner. The timing of any rate cut is likely to be in the third or fourth quarter next year, contingent upon these factors.