Chairman Powell met the market's expectations with a 50 basis point rate cut, but he also confidently emphasized that the soft landing of the economy is still the basic situation, and reiterated multiple times that the U.S. economy is "doing quite well."
Key Points:
With inflation declining, the soft landing remains the basic expectation. "The U.S. economy is in good shape, and our decision today is to maintain this situation." "The U.S. economy is basically fine." "I believe inflation will fall to 2%."
Stay ahead. Powell promised to "stay ahead" in interest rate adjustments to address the slowing job market, and specifically focus on the hiring rate (a 50 basis point rate cut is our commitment to not falling behind the situation). The Fed raised its unemployment rate expectations for 2024 to 4.4% (previously 4.0%), for 2025 to 4.2% (previously 4.0%), and for 2026 to 4.3% (previously 4.1%).
The 50 basis point change aims to convey a "strong move." Powell admitted that the 50 basis point adjustment is a strong move, but he also indicated that future moves may not necessarily proceed at the same pace ("we should not assume this is the new normal"), leaving room for maneuver in future Fed meetings. Basically, do not expect a continuous 50 basis point adjustment, nor expect a 75 basis point rate cut, but if economic data proves necessary, the Fed may also make multiple 50 basis point adjustments ("we always do what we believe is beneficial to the economy at the moment, and today's decision is no exception.").
The key is hard data. The Fed will focus on hard economic data rather than soft sentiment data, and will pay particular attention to the market's reaction to lower interest rates.
Our position is consistent. Powell pointed out that all 19 members agreed that there should be multiple rate cuts this year, with 17 members believing there will be 3 complete cuts, and 2 members believing there will be 4, which is "significantly different" from the situation in June. The only dissenter was Bowman, who this time supported a 25 basis point rate cut.
Market Reaction:
Interest rates: The market still expects 2.5 more rate cuts in 2024, slightly ahead of the median in the Fed's dot plot. Bond yields hardly changed after the FOMC meeting, as the results were basically in line with expectations.
Foreign exchange: The Fed's decision led to a weakening of the U.S. dollar, especially considering that the Bank of Japan may maintain a hawkish stance at its upcoming meeting, causing the dollar to weaken against the yen.
Stocks: The Fed's implementation of "strong" accommodative policies, and its statement that the economic situation is still good and inflation is expected to decline, prompted a rise in the stock market.
Cryptocurrency: Benefiting from the strong performance of the stock market, BTC rose to $60k, and altcoins also showed strong performance, indicating an overall increase in risk sentiment.
You can use the SignalPlus trading indicator feature at t.signalplus.com to get more real-time cryptocurrency information. If you want to receive our updates instantly, please follow our Twitter account @SignalPlusCN, or join our WeChat group (add assistant WeChat: SignalPlus123), Telegram group, and Discord community to interact and communicate with more friends. SignalPlus Official Website: https://www.signalplus.com
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
