Federal Reserve meeting announces latest developments: Increased uncertainty in economic outlook, possible interest rate cuts one to two times before the end of the year
On May 28, the Federal Reserve released the minutes from the meeting held on May 6-7, indicating that although the federal funds rate remains between 4.25%-4.5%, the uncertainty regarding the future of the economy has significantly increased. Officials at the meeting unanimously agreed that it is necessary to closely monitor subsequent data and respond cautiously to potential risks, especially against the backdrop of rising unemployment rates and inflationary pressures.
According to the benchmark path for options pricing strategies, current mainstream market expectations suggest that there may be one to two interest rate cuts by the end of the year, each by 25 basis points, reflecting a growing expectation of economic slowdown.
Meanwhile, prominent commentator Nick Timiraos, known as a conduit for the Federal Reserve's views, disclosed that officials are concerned about the current economic situation not only due to traditional growth pressures but also due to the rising risk of stagflation.
Federal Reserve officials stated that recent tariff adjustments might push prices higher, leading to a "significant" rise in inflation, while the unemployment rate may remain elevated in the coming years.
In summary, this series of signals indicates that despite a potentially dovish economic forecast for June, officials maintain a cautious attitude towards the future direction of the economy.
Although market expectations suggest one to two interest rate cuts by the end of the year, this is more of a preventive measure against economic slowdown rather than an overly pessimistic view on the economic outlook.
In this context, investors need to closely monitor the Federal Reserve's subsequent movements and macroeconomic data to respond to potential market volatility.