No interest rate cuts (in line with expectations), dot plot indicates two interest rate cuts in 2025 (in line with expectations), slowing down balance sheet reduction.
My personal opinion:
In simple terms, the information that this FOMC wants to convey.
#“We at the Federal Reserve see some uncertainty, but everything is going smoothly, and the U.S. is not in a recession.”
Being too eager / significantly increasing interest rate cuts + quantitative easing = recession has already occurred / they clearly see a recession; reducing interest rate cuts + continuing balance sheet reduction = the market will further decline, leading to a real recession.
This time, choosing to 'slow down' the balance sheet reduction still aligns with the expectation of two interest rate cuts, taking a middle ground between not hitting the market and countering inflation, as well as multiple points meeting expectations.
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Journalist Q&A (approximately)
1. About tariffs → inflation
Answer: We will pay attention to which tariff policies will lead to long-term inflation in response (corresponding to the sticky inflation caused by the pandemic).
2. About weakening consumer data.
Answer: The recent consumer data seen is all from companies and institutions and does not reflect the real situation.
3. Can't hear clearly *
4. Can't hear clearly ×2
5. When will the layoffs at DOGE be reflected in the reports?
Answer: Not that fast, but I believe the impact is not significant.
6. About the Federal Reserve's judgment on so-called temporary factors (regarding the pandemic's mistakes).
Answer: Regarding this, we will pay close attention and we will step up when necessary.
7. Does monetary policy respond to tariffs?
Answer: Monetary policy mostly focuses on consumption and employment.
8. Straight to the point * Is there a recession?
Answer: The chances of a major opportunity are low (75%-80%), although compared to historical data, the chance of falling into a recession is slightly higher, but all data proves that the U.S. economy is not sufficient to fall into recession.
9. About the personnel arrangements of Trump, such as the SEC.
Answer: No comment.
10. How can people be sure that the Federal Reserve clearly knows the economy is entering a downturn?
Too much to write, passed all questions about political topics (DOGE) during the Q&A session. Although the Federal Reserve did not mention tariffs or Musk's government efficiency department in the statement, they clearly stated that if necessary, they would respond, that is, 'If risks emerge that could impede the Federal Reserve's objectives, the committee will be prepared to adjust its monetary policy stance as appropriate.'
Overall, Chairman Powell emphasizes looking at the long term; in this speech, he also mentioned that 'the U.S. economy is resilient.' I personally think this statement is a bit hawkish, indicating that under normal circumstances, the Federal Reserve is not in a hurry to cut interest rates, and the expectation of rate cuts will significantly decrease.
As of 2:00 AM on March 20, futures data shows that traders believe there is a 62.1% chance that the Federal Reserve will resume interest rate cuts at the June meeting, compared to 57% before the Federal Reserve makes a decision. This may lead to a drop caused by loss of expectations.
The above is just a personal opinion; we still need to look at multiple data points and market developments.
GN