As expected, we remained inactive and displayed the dot matrix, but unexpectedly slowed down and shrunk the table again. The Fed's interest rate decision in the early hours of the morning and Powell's press conference on Monday, which stated that interest rates will remain unchanged, economic forecasts will be lowered, future inflation data will be raised, and two interest rate cuts in 25 years will still be the median value of the dot matrix. 1. Compared to the January interest rate decision statement, in this statement, the Federal Reserve stated that the uncertainty of the economic outlook has increased; The Federal Reserve removed the statement from January that "the committee believes the risks of achieving employment and inflation targets are roughly balanced. In this statement, the Federal Reserve announced that it would slow down and shrink its balance sheet from April 1, targeting at the US treasury bond bonds, and that it would lower the limit of the number of US bonds that will not be reinvested after maturity from 25 billion dollars to 5 billion dollars. The shrinking process of the Federal Reserve's holdings of institutional bonds and mortgage-backed securities remains unchanged. The pace of the Federal Reserve's balance sheet reduction is as follows: The initial monthly reduction was $95 billion; Slow down to a monthly reduction of $60 billion by July 2024; Starting from April 25th, the monthly reduction will be $40 billion. 2. The median interest rate forecast remains unchanged, and it is still expected that there will be two 25 basis point interest rate cuts this year and next. In the dot plot, it is expected that the number of people who will not cut interest rates this year will increase from one to four, those who will cut interest rates twice will decrease from one to nine, and those who will cut interest rates three times will decrease from one to two. We have lowered our GDP growth forecast for the next three years, from 2.1% to 1.7% this year. We have also slightly increased our unemployment rate to 4.4% this year. We have also raised our PCE inflation forecast for the next two years and our core PCE inflation forecast for this year. The core PCE has seen the largest increase, rising from 2.5% to 2.8%. 3. At Powell's press conference 1) At the beginning of the press conference, Powell's viewpoint has already highlighted the Federal Reserve's observation of the overall economy: the economy remains strong, inflation is a bit high, the labor market is stable, but future economic uncertainty is increasing, and slowing down the balance sheet reduction is a technical decision. 2) Regarding inflation: The baseline forecast for tariffs is temporary, and it is not believed that there will be a significant increase in long-term inflation expectations if they remain stable or slightly decrease. However, the increase in uncertainty may delay further progress in inflation this year. Housing inflation is performing well and continuing to decline, and it is necessary to closely monitor the sustainability of commodity inflation; 3) Regarding the labor market: The recruitment and layoff rates are both low, and a significant increase in layoffs may quickly translate into unemployment. At present, the labor force is relatively stable. If the future labor force slows down, policies can be relaxed when necessary; 4) Economic expectations The slowdown in economic growth expectations, the rise in inflation expectations, and the decline in sentiment are largely related to significant changes in government policies. 5) Regarding slowing down and reducing the balance sheet It can be seen that this slowdown in balance sheet reduction is largely a response measure taken in advance, considering the debt ceiling window period and the possibility of issuing new bonds to extract liquidity from the market after a new debt ceiling agreement is reached in the future. But as Powell said, a slower pace of shrinking the balance sheet means longer time. 4. How do you view the views and attitudes expressed at this interest rate meeting? Monetary policy, economic forecasts, and dot plots are all as expected, In line with the current economic situation and market sentiment, reflecting "seeking truth from facts", officials attach great importance to "uncertainty". I thought it would predict the future pace of shrinking the balance sheet, but I didn't expect it to slow down again. Previously, the market expected a pause at some point in the future. The monthly reduction of treasury bond by $20 billion can alleviate the pressure on the treasury bond bond market (secretly responding to the weakening of long-term interest rates that Besant and Trump hope) Although the current state of the market was not explicitly mentioned, it feels that the pessimistic sentiment in the market has still been transmitted to the Federal Reserve. Powell's press conference did not use particularly strong language, and overall it was a relatively softened neutral and dovish statement. In the current pessimistic market sentiment, not being tough is already a good attitude.