1. Interest Rate Cut Pace
Topic: The Federal Reserve will discuss the specific timing and magnitude of slowing the pace of interest rate cuts. The Fed may further discuss how to conduct interest rate cuts more cautiously in the future, considering the upward revision of economic growth expectations and the delay in achieving the inflation target of 2% until 2027. The Fed may also explore how to adjust monetary policy based on changes in the economy and financial markets, ensuring that it does not place excessive pressure on economic growth.
2. Economic Growth and Inflation Expectations
Topic: Discuss the latest adjustments to economic growth expectations. The Fed may analyze the outlook for economic growth in detail and discuss how to address the delay in the long-term inflation target. The Fed may emphasize that inflation is still on track to slow down, but the timeline for achieving the inflation target has been pushed back to 2027. This topic may involve in-depth discussions on future economic growth and inflation control policies.
3. Direction of Monetary Policy Easing
Topic: Discuss whether the overall direction of monetary policy easing remains unchanged. Despite the slowdown in the pace of interest rate cuts, the Fed may reaffirm its stance on monetary policy easing to ensure that market liquidity is maintained and that excessive downward pressure on the economy is avoided while economic growth remains robust.
4. Balance Sheet Reduction and Liquidity Release (an important part that triggers market volatility)
The Fed will discuss how to adjust the balance sheet reduction process, especially considering that the ON RRP (Overnight Reverse Repurchase Agreement) will soon be exhausted in the first quarter of 2025. The Fed may assess whether it needs to slow down the pace of balance sheet reduction or adjust the balance sheet to ensure liquidity in financial markets. How to manage liquidity while considering potential future market demands will also be a key topic on the agenda.
5. Potential Impacts of the Trump Administration
The Fed may discuss the uncertainties of future policies from the Trump administration and their impact on the economy and financial markets. Given changes in inflation and economic growth outlooks, how to adjust monetary policy to respond to possible fiscal policy or other policy changes will be one of the key topics of discussion at the meeting.
6. Financial Market Stability
The Fed is likely to continue monitoring the stability of financial markets, particularly the responses of the stock market and bond market, as well as the impact of monetary policy and the slowdown in interest rate cuts on market liquidity, investor sentiment, and asset prices. How to avoid excessive market volatility while maintaining economic growth may also be part of the agenda.
