1. Meeting time and key points (Beijing time)

  • Meeting dates: May 6 - 7 (two consecutive days discussing interest rate policy)

  • Results announcement: May 8 at 2:00 AM (Federal Reserve announces interest rate decision)

  • Powell's speech: May 8 at 2:30 AM (Federal Reserve Chair interprets policy, a trigger for market volatility)

2. The three core issues the market is concerned about

  1. Will interest rates change?

    • Three possibilities:

      • Rate hike: Extremely low probability (only 8.3% chance), unless inflation suddenly spirals out of control.

      • Rate cut: Market expectations are heating up, but the probability of a rate cut in May is only 8.3%, with most believing it will start in June.

      • Maintain status quo: Probability as high as 91.7%, most likely outcome (current interest rate 4.25%-4.5%).

    • Why is it important?: Interest rates directly affect borrowing costs. For example, a rate hike makes mortgages and car loans more expensive, and makes it harder for businesses to expand loans; a rate cut has the opposite effect, stimulating the economy but potentially pushing up prices.

  2. How important is Powell's 'hint'?

    • Historical case: In April 2025, Powell mentioned 'possible tariffs,' and US stocks plummeted 3% that day, but Bitcoin rose 0.8% against the trend.

    • Potential signals:

      • If Powell says 'inflation pressures are easing,' it may hint at future rate cuts.

      • If he emphasizes 'fighting inflation is the top priority,' it may delay rate cuts, or even hint at future rate hikes.

  3. What impact does it have on ordinary people?

    • Stock market: A rate cut may stimulate stock prices to rise (lower corporate financing costs), while a rate hike may lead to a drop (higher borrowing costs, reduced profits).

    • Mortgages and car loans: Rising interest rates increase monthly payments; falling rates decrease monthly payments.

    • Saving money: Bank deposit rates may adjust with Federal Reserve rates; higher rates lead to better deposit returns.

3. Strategies for ordinary investors

  1. Short-term operational advice:

    • Aggressive: If betting on an interest rate cut, consider positioning in stocks, cryptocurrencies, and other risk assets before May 7 (but be aware of volatility risks).

    • Conservative: Wait for Powell's speech before taking action to avoid 'stepping on a landmine.' For instance, after the Federal Reserve announced a rate cut in December 2024, Bitcoin plummeted by 5.4%.

  2. Long-term planning:

    • Diversified investment: Don't put all your money in the stock market or cryptocurrencies; consider mixing in bonds, gold, and other safe-haven assets.

    • Monitor policy trends: The Federal Reserve makes interest rate decisions eight times a year, and the May meeting is a key point that requires continuous tracking.

4. Market expectations and potential risks

  • Market consensus: Most economists believe rates will remain unchanged in May, with a possible 25 basis point cut in June.

  • Unexpected risks:

    • Sudden rate hike: May trigger simultaneous declines in the stock, bond, and cryptocurrency markets.

    • Rate cut exceeds expectations: May push up asset bubbles and increase long-term inflation pressures.

5. Special reactions in the cryptocurrency market

  • Historical patterns:

    • In 2021, the Federal Reserve cut rates, and Bitcoin rose to $68,000; in 2022, rate hikes led to a 70% drop in Bitcoin.

    • After Powell's hawkish remarks in April 2025, Bitcoin briefly fell but quickly rebounded to $84,000.

  • Current dynamics:

    • Market expectations for rate cuts are heating up, and cryptocurrencies may benefit from increased liquidity.

    • However, be wary of external factors such as tariff policies and regulatory changes that may cause volatility.

Summary: How should ordinary people respond?

  1. Don't panic: Adjustments to Federal Reserve policy are normal, and short-term fluctuations do not represent long-term trends.

  2. Focus on key points: Powell's speech at 2:30 AM on May 8 is a 'barometer' for market direction.

  3. Diversified investment: Based on your risk tolerance, reasonably allocate assets to avoid the impact of single market fluctuations on overall wealth.


Final reminder: Investment carries risks, and decisions should be made cautiously. Ordinary investors are advised to prioritize long-term stable strategies and avoid blindly following trends.