Cathay United Bank: Fed May Cut Rates in Q4 if Supply-Side Shocks Ease
Cathay United Bank predicts that the U.S. Federal Reserve (Fed) may begin cutting interest rates in the fourth quarter of this year if supply-side shocks ease. However, the Fed is expected to maintain a wait-and-see approach in the short term due to high oil prices and geopolitical uncertainties in the Middle East.
📋 Article Processing Timeline
- 📰 Published: April 30, 2026 at 23:41
- 🔍 Collected: May 1, 2026 at 00:02 (20 min after Published)
- 🤖 AI Analyzed: May 1, 2026 at 07:45 (7h 42m after Collected)
Central News Agency
(Central News Agency reporter Su Siyun, Taipei, 30th) The U.S. Federal Reserve decided to keep interest rates unchanged. Cathay United Bank stated today that with the stalemate in US-Iran diplomatic mediation and high oil prices pushing up inflationary pressures, the Fed will maintain a wait-and-see approach in the short term; however, if future supply-side shocks gradually ease, it is expected that the Fed still has a chance to initiate interest rate cuts in the fourth quarter of this year, but the overall policy pace will be cautious.
The U.S. Federal Reserve (Fed) today decided to keep interest rates unchanged, with the federal benchmark interest rate remaining in the range of 3.5% to 3.75%. In terms of the decision-making process, the meeting passed the resolution to maintain interest rates with 8 votes (for maintaining interest rates) to 4 votes (against).
Looking ahead at future interest rate policies, Cathay United Bank analyzed that with the stalemate in US-Iran diplomatic mediation and high oil prices pushing up inflationary pressures, the Fed will maintain a wait-and-see approach in the short term. If future supply-side shocks gradually ease, accompanied by a cooling labor market and slowing wage growth, it is expected that the Fed still has a chance to initiate interest rate cuts in the fourth quarter, but the overall policy pace will be cautious.
Regarding future macroeconomic performance, Cathay United Bank stated that high oil prices lead to increased raw material and transportation costs. If the recovery of the Strait of Hormuz is slow, it will subsequently lead to a compression of disposable income for the public and corporate profits. On the other hand, the continuous expansion of capital expenditures by the technology industry still provides support for economic momentum. Overall, inflation gradually has an upside risk, while economic growth gradually has a downside risk.
In terms of the stock market, Cathay United Bank pointed out that as market expectations for the "worst-case scenario" of the Middle East conflict cooled, it drove US stocks to new highs; however, given the significant short-term gains, attention still needs to be paid to market volatility risks, and it is not advisable to excessively chase prices. In the long run, it is estimated that US corporate earnings will still have approximately 20% growth potential in 2026, and the fundamentals still support the bullish trend.
In terms of the foreign exchange market, Cathay United Bank analyzed that in the short term, the US dollar still has support due to the slow recovery of the Strait of Hormuz and the bumpy path of US interest rate cuts. After June, the policy pace of the European and Japanese central banks will further affect the future trend of the US dollar. If the European and Japanese central banks restart interest rate hikes and the Fed delays its interest rate cut schedule, the US dollar index is expected to consolidate between 97 and 100; conversely, once expectations for Fed rate cuts rise, the dollar may weaken. (Editor: Yang Kaixiang) 1150430
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(Central News Agency reporter Su Siyun, Taipei, 30th) The U.S. Federal Reserve decided to keep interest rates unchanged. Cathay United Bank stated today that with the stalemate in US-Iran diplomatic mediation and high oil prices pushing up inflationary pressures, the Fed will maintain a wait-and-see approach in the short term; however, if future supply-side shocks gradually ease, it is expected that the Fed still has a chance to initiate interest rate cuts in the fourth quarter of this year, but the overall policy pace will be cautious.
The U.S. Federal Reserve (Fed) today decided to keep interest rates unchanged, with the federal benchmark interest rate remaining in the range of 3.5% to 3.75%. In terms of the decision-making process, the meeting passed the resolution to maintain interest rates with 8 votes (for maintaining interest rates) to 4 votes (against).
Looking ahead at future interest rate policies, Cathay United Bank analyzed that with the stalemate in US-Iran diplomatic mediation and high oil prices pushing up inflationary pressures, the Fed will maintain a wait-and-see approach in the short term. If future supply-side shocks gradually ease, accompanied by a cooling labor market and slowing wage growth, it is expected that the Fed still has a chance to initiate interest rate cuts in the fourth quarter, but the overall policy pace will be cautious.
Regarding future macroeconomic performance, Cathay United Bank stated that high oil prices lead to increased raw material and transportation costs. If the recovery of the Strait of Hormuz is slow, it will subsequently lead to a compression of disposable income for the public and corporate profits. On the other hand, the continuous expansion of capital expenditures by the technology industry still provides support for economic momentum. Overall, inflation gradually has an upside risk, while economic growth gradually has a downside risk.
In terms of the stock market, Cathay United Bank pointed out that as market expectations for the "worst-case scenario" of the Middle East conflict cooled, it drove US stocks to new highs; however, given the significant short-term gains, attention still needs to be paid to market volatility risks, and it is not advisable to excessively chase prices. In the long run, it is estimated that US corporate earnings will still have approximately 20% growth potential in 2026, and the fundamentals still support the bullish trend.
In terms of the foreign exchange market, Cathay United Bank analyzed that in the short term, the US dollar still has support due to the slow recovery of the Strait of Hormuz and the bumpy path of US interest rate cuts. After June, the policy pace of the European and Japanese central banks will further affect the future trend of the US dollar. If the European and Japanese central banks restart interest rate hikes and the Fed delays its interest rate cut schedule, the US dollar index is expected to consolidate between 97 and 100; conversely, once expectations for Fed rate cuts rise, the dollar may weaken. (Editor: Yang Kaixiang) 1150430
Stand with the facts, every sponsorship you provide is a force to protect press freedom.
Download the Central News Agency "First-hand News" APP to stay updated with the latest news.
Text, images, and videos on this website may not be reproduced, publicly broadcast, or publicly transmitted and used without authorization.