🏛️ In Line with Expectations: The Federal Reserve Confirms a 25 Basis Points Rate Cut in November, and Another 67 Basis Points Expected Next Year!
According to the latest news, the Federal Reserve announced on November 7 local time that it would lower the benchmark interest rate by 25 basis points to 4.50%-4.75%. This is the second rate cut by the Federal Reserve this year, in line with market expectations.
The decision to cut rates was unanimously passed, with the wording of the policy statement remaining largely unchanged, continuing to emphasize close monitoring of the risks to the dual objectives. However, the phrase "more confident that inflation is sustainably moving toward the target" was removed, and there was no explicit signal regarding future rate cuts, nor any comments on the outcome of the U.S. elections.
Following the announcement of this rate cut, the U.S. interest rate futures market expects the Federal Reserve to cut rates by another 25 basis points in December, and possibly by an additional 67 basis points in 2025.
Federal Reserve Chairman Powell stated at a press conference that inflation expectations remain stable and that the policy stance will gradually shift toward a neutral position over time. Additionally, as rate cuts approach a neutral interest rate, the Federal Reserve may consider adjusting the pace of rate cuts.
Powell also emphasized that decisions will continue to be made on a meeting-by-meeting basis and that they are prepared to adjust the pace of rate changes and target assessments accordingly.
In summary, the Federal Reserve's assessment of inflation and employment risks shows a balanced stance, which may indicate an increase in uncertainty regarding future economic prospects. This also reflects the Federal Reserve's cautious attitude and its intention to flexibly adjust policies based on actual conditions to achieve inflation and employment goals.
🗣 Views:
The Federal Reserve's rate cuts typically lower the financing costs in capital markets, encourage corporate investment, and promote economic growth. At the same time, rate cuts may lead to a depreciation of the dollar, prompting capital to shift to high-yield markets, positively impacting capital inflows to emerging markets and global liquidity.
However, the sustainability and extent of rate cuts remain uncertain, leading to divergences in market expectations regarding the Federal Reserve's future policies, which may trigger market volatility. Therefore, while investors look forward to returns, they should remain vigilant about market fluctuations, manage risks effectively, and allocate assets wisely.
💬 Are the Federal Reserve's consecutive rate cuts really beneficial for the investment market? What are your views on the current market environment and future investment opportunities?