Bai Xue, senior vice director of Dongfang Jincheng's research and development department, said on September 18 that the probability that the Fed will raise interest rates again during the year has increased significantly, but this does not mean that the Fed will start a continuous cycle of interest rate hikes. First, although the US economy is currently resilient, the characteristics of K-type differentiation are obvious. The problems of low residents' savings rates and declining consumption sustainability are gradually becoming apparent, and the AI investment cycle may also face marginal weakening. Second, long-term US bond yields have climbed to a high level since 2007. The spontaneous tightening of financial conditions has substantially suppressed interest rate sensitive sectors, and the Federal Reserve still needs to carefully evaluate the cumulative effects of austerity policies. Again, the core purpose of this rate hike is to lock in inflation expectations and prevent inflation from solidifying again. It is a phased policy adjustment, not a systemic austerity in response to economic overheating and a spiral rise in inflation. Currently, US inflation is only showing a phased rebound; it has not formed a wage-price spiral, and fundamentals do not support continued interest rate hikes. After the September rate hike is implemented, if the December inflation data is still strong, interest rates may be raised again. The Federal Reserve will then enter an observation period to observe the progress of inflation falling back to the target at an interest rate level of 4.00% to 4.25%, and then decide whether to maintain, raise interest rates, or switch to cutting interest rates.

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