Analysis of the impact of the Fed's 50bps rate cut on the future market
By CICC At its September meeting, the Federal Reserve cut rates by 50 basis points, with its monetary policy statement emphasizing the goal of maximum employment. The Fed's actions indicate that its reaction function has shifted entirely from focusing on inflation to prioritizing employment. Officials have little tolerance for rising unemployment and do not want to jeopardize the positive outlook for a "soft landing" due to excessive tightening. Looking ahead, we believe the Fed will likely maintain a "dovish" stance until the labor market stabilizes. In the short term, the rate cuts increase the likelihood of a soft landing in the U.S., but the combination of "loose fiscal and monetary policies" could also raise medium-term inflation risks. This meeting came against the backdrop of slowing inflation in the U.S. over the past two months, coupled with signs of weakening in the labor market. The market was eager to see how the Fed would respond to these ...