The Federal Reserve Releases Dual Positive Signals: Interest Rate Cut Expectations Heat Up, Capital Markets Welcome Fresh Funds
Today's biggest benefit for the market comes from the shift in Federal Reserve policy expectations, with two key signals jointly driving the rise in interest rate cut expectations, injecting confidence into global capital markets.
The first positive signal comes from the Federal Reserve's internal statements: Vice Chair Michelle Bowman clearly supports starting interest rate cuts in September and expects three cuts this year, each by 25 basis points. Previously, Federal Reserve Chairman Powell's statements leaned towards a maximum of two cuts this year, with the market generally expecting only one, while Bowman's "three cuts" plan significantly exceeds expectations, releasing a more accommodative policy signal. This statement aligns closely with JPMorgan's recent forecast — the bank believes that tariff factors will not hinder the decline in inflation, and the dollar's interest rate cut has entered the "arrow on the string" phase.
The second positive signal points to a long-term policy direction: Treasury Secretary Yellen revealed yesterday that she has taken the lead in identifying a successor to Federal Reserve Chairman Powell. Combined with the previous multiple expressions of dissatisfaction from "the one who understands" regarding Powell, it is highly likely that Powell will step down after his term ends in May 2026. The market generally believes that one of the core goals of replacing the Federal Reserve Chairman is to promote a more aggressive interest rate cut policy, which further strengthens the easing expectations for next year.
In summary, the Federal Reserve's interest rate cut expectations have been fully opened: even if the pace of cuts this year is relatively slow, there is hope for full-scale easing next year. Under this policy expectation, the capital market does not need to be overly conservative, and risk assets such as the stock market and commodities are seeing positive expectations, among which A-shares, as an important direction of foreign investment attention, have further strengthened the momentum of fund inflows.
