CICC: Milan pumps down the average of the dot plot for interest rate cuts

[Jin10: Milan pump the dot plot interest rate average] Jin10 research report states that the core message of this Fed meeting is: the "risk control style" interest rate cuts are moderate, and the "dot plot" expects two more rate cuts within the year, but there are significant differences. 1) On the surface, the "dot plot" predicts two more rate cuts this year, but looking closely at the voting distribution of the 19 committee members, 9 expect only one or even fewer cuts, 9 expect two cuts, and another person anticipates a cut of 125bp (which is obviously unlikely, and the market speculates it could be Milan). In other words, if it weren't for Milan's low expectation pulling down the average, the "dot plot" as the final result based on the median would indicate that there is basically an equal chance of one or two more rate cuts this year, aligning with the current futures market's expectations which account for over 80% probability of rate cuts in October and December. 2) There is even greater divergence for 2026, with the median indicating only one rate cut, significantly less than the current futures market's expectation of three more cuts. However, as next year involves Powell and several committee members' turnover, the market has not overreacted to next year's path. ( Jin10 )