On May 25, market analyst Jeff Cox wrote that it seems less likely that the Fed will cut interest rates this summer.A series of better-than-expected economic data, combined with the latest comments from policy makers, suggests that the Federal Reserve will not relax its policy in the short term. Traders adjusted their expectations again last week and no longer think they might cut interest rates in September. Now they expect to cut interest rates only once by the end of this year.

Quincy Krosby, chief global strategist at LPL Financial, said: “The economy may not cool down as the Federal Reserve wants. The market takes every bit of data and translates it into the Fed's opinion. So if the Federal Reserve relies on data, then the market is likely to rely more on data.”

Over the past week or so, these data sent a pretty clear message: US economic growth has been stable, if not rising, and inflation has always existed because consumers and policymakers are wary of the high cost of living.

The minutes of the May meeting of the Federal Reserve show that officials still lack confidence in cutting interest rates, and even a few people said that if inflation worsens, they may be open to raising interest rates.

Furthermore, Federal Reserve Governor Waller said earlier last week that before agreeing to cut interest rates, he needed to see several months of data showing that inflation was easing.

Market analyst Jeff Cox said that in summary, there is not much reason for the Federal Reserve to relax its policy.

Bank of America economist Michael Gapen said in a report: “The recent Fed speech and the minutes of the May FOMC meeting clearly indicate that the unexpected rise in inflation this year, combined with steady economic activity, may not consider cutting interest rates for the time being. There also seems to be a strong consensus that the policy is in a restricted area, so there may be no need to raise interest rates either.”

Meeting minutes show that at the most recent FOMC meeting, which ended on May 1, some members even suspected that “the impact of high interest rates may be less than in the past.”

The Bank of America believes that the Federal Reserve may not start cutting interest rates until December, but Gapen pointed out that under the dual influence of a possible weakening of the job market and slowing inflation, there may be some uncertainties.

Wall Street analysts such as Gapen will pay close attention to the monthly personal income and expenditure data released by the US Department of Commerce on Friday, which will also include CPI, which is the inflation indicator the Federal Reserve is most concerned about.

According to the Chicago Mercantile Exchange Group (CME Group)'s FedWatch Tool (FedWatch Tool), traders expected the Fed to cut interest rates at least six times at the beginning of the year, but the pricing last Friday afternoon showed that the possibility of cutting interest rates only once is about 60%.

Goldman Sachs postponed the Federal Reserve's first interest rate cut until September, but the company still expects to cut interest rates twice this year.

The Federal Reserve's benchmark federal funds rate has remained between 5.25% and 5.50% since July last year.

Goldman Sachs economist David Mericle said in a report: “We continue to think that cutting interest rates is optional, which reduces the urgency. Although the Federal Reserve leadership seems to agree with our relaxed view of the inflation outlook and may be preparing to cut interest rates soon, some FOMC participants seem more concerned about inflation and are less willing to cut interest rates.”

Based on the above news, if the Federal Reserve does not cut interest rates this summer and chooses to postpone interest rate cuts, as predicted by analysts, this is good news for the US dollar index and is expected to provide some support.

US dollar index daily chart

At 8:34 Beijing time on May 27, the US dollar index reported 104.73