Minsheng Macro: The Fed's rate cut is the beginning of the problem. The buttons of "stagnation" and "inflation" are more easily triggered.

Jin10 Data September 18 - According to a macro research report by Minsheng, the Fed's interest rate cuts are the beginning of the problem, not the end. If rates are cut too much and too quickly, inflation becomes a risk; if rates are cut too little and too slowly, Trump is the risk. The dot plot suggests a 75bp rate cut within the year, which is an increase of 25bp compared to June, still aligning with Powell's cautious easing rhetoric at the Jackson Hole meeting, but this is quite different from the 150bp desired by Milan and the White House behind him. The struggle for the Fed's independence has just begun. Looking ahead, the cooling labor market and the "data paradox" of sticky inflation, along with the political gamesmanship brought by Milan's appointment, all put the Fed's decision-making in a "dilemma" situation, complicating the future path of easing. Under pressure from the White House, the market may still occasionally price in more than a 75bp rate cut within the year. From an economic dynamics perspective, we continue to maintain a focus on the growth and inflation combination following sustained easing. Continuous rate cuts won't be smooth sailing, and under Trump's policy mix, a "Blonde Girl-style" soft landing (growth recovery + low inflation) becomes more difficult, making it easier to trigger the buttons of "stagnation" and "inflation".