Overview of Lao Bao's Key Points

1. Statement Overview: The wording remains largely unchanged, and the decision to lower interest rates by 25 basis points was passed with a vote ratio of 11-1, with Hamack supporting a pause in rate cuts. The ON-RRP rate was lowered by 30 basis points.
2. Interest rate outlook: will consider the 'magnitude and timing' of further rate cuts. The median value in the dot plot has been raised, showing that there will be two rate cuts in each of the next two years, but some officials have serious disagreements.
3. Inflation Outlook: The time for achieving 2% inflation target is postponed to 2027, with upward adjustments to the expectations for 2024-2026. Most officials expect the risks to be tilted to the upside.
4. Economic Outlook: Slightly lowering the unemployment rate expectations. The wording for steady economic growth remains unchanged, with an upward revision of the actual GDP growth rate expectations for the present and next year. This year, it is significantly raised from 2% to 2.5%.
Powell press conference:
1. Interest rate outlook: When considering interest rate adjustments, one can be more cautious. Changes in statement wording indicate that it is in or approaching a stage of slowing interest rate cuts, and it seems unlikely to raise interest rates next year. If inflation cannot sustainably move towards 2%, interest rate cuts may slow down. Slowing down interest rate cuts too much may impact the economy and employment.
2. Inflation outlook: It may take another year or two to reach the target; there is high risk and uncertainty; discussion is ongoing on how tariffs can drive inflation.
3. Economic Outlook: The overall economic performance is strong, and the economic growth in the second half of the year is faster than expected. There is no reason to believe that the possibility of economic downturn is higher than usual.
4. Employment Outlook: The labor market remains robust and is not a significant source of inflationary pressure. There is no concern of cooling to a worrisome level and will continue to be monitored.
5. Other statements: (regarding Bitcoin reserve policy) The Federal Reserve does not allow and has no intention to hold Bitcoin. Today's interest rate decision is a difficult choice.
6. Market reaction: From the announcement to Powell's speech, spot gold unilaterally plummeted by $56; the US dollar index has risen by 110 points since the announcement, reaching a two-year high; the US 2-year treasury yield has risen by 15 basis points; the Nasdaq fell by 3%; Bitcoin dropped by over $5000.
7. The latest expectation: Traders' pricing of the Fed's rate cuts continues to decrease, with only 37 basis points expected to be cut in 2025, far below the pre-meeting 75 basis points.