On the afternoon of September 17 local time, Beijing time today (18 September) early in the morning, the record of the U.S. Federal Reserve Committee monetary policy meeting showed,The Federal Reserve decided to cut the target range of the federal funds rate by 25 basis points to between 4.00% and 4.25%. This is the first rate cut by the Federal Reserve since December 2024, and two more interest rate cuts are expected during the year.Federal Open Market CommitteeA decision to reduce interest rates by 25 basis points was passed by a vote of 11 to 1.He is currently the chairman of the White House Economic Advisory Committee.Stephen Miran is the only one who disagrees,The two governors, Michel Bauman and Christopher Waller, who did not agree to keep interest rates unchanged at the monetary policy conference in July this year, expressed their satisfaction with the rate cuts approved at the meeting.
Fed Chairman Powell, in response to a journalist's question,Once again, the independence of the Federal Reserve is emphasized.U.S. President Donald Trump has been pressuring the Federal Reserve to cut interest rates since taking office in January and has nominated Stephen Milan as chairman of the White House Economic Advisory Committee.Powell also confirmed that the Fed is pursuing a 10% attrition plan,Covering the Board and all Reserve Banks – the size of the Federal Reserve staff will basically return to the level of a decade ago after completion.
Chief economist Song Shinto told the Daily Economic News reporter (hereinafter referred to as "per-reporter") that the decision to reduce interest rates in September was a two-faceted mirror of politics and economics, 25 base points seem a little bit, 50 base points are too many.
According to the Barclays research team, the U.S. unemployment rate will rise slightly and the risk of falling jobs will increase, and the Federal Open Market Commission (FOMC) will reduce interest rates by twenty-five basis points in October and December, and by twenty-five basis points in March and June 2026, respectively.
Powell Photo source: Xinhua news agency reporter Hu友松摄
Transfer of focus.——
The subtle shift from “anti-inflation” to “secure employment”
At the September interest rate meeting, which attracted much attention from the market, the latest policy statement of the Federal Reserve revealed a clear signal: concerns about the slowdown in employment have increased significantly.
The statement deleted the statement that "the labor market situation is still stable" in July, and admitted that "employment growth has slowed down, the unemployment rate has increased slightly but remains low" and "downside risks in employment have increased". This subtle change in wording confirms that the Fed's policy focus has shifted from "curbing inflation" to "boosting employment."
The map shows,Federal Reserve officials expect an average of 0.5 percentage points before the end of the year, which means that decision-makers tend to lower interest rates by 25 basis points each at the remainder of the two interest rate meetings this year, bringing the end-of-year interest rate range down to around 3.5% to 3.75%.
Simon Dangour, head of fixed income macro strategy at Goldman Sachs Asset Management, said: "Currently, the FOMCMost members aim to cut interest rates twice this year.This suggests that the doves on the committee now dominate.”
In this regard, the Fed's explanation is that inflation may not decline as fast as previously expected. The latest economic forecast shows that officials have raised their personal consumption expenditures (PCE) inflation forecast for 2026 to 2.6%, and the core PCE has also been raised to 2.6% simultaneously, which means that the Fed's process to achieve its 2% target may take longer than thought.
At the press conference, Fed Chairman Powell detailed the considerations behind the interest rate cuts.He noted that there is a delicate balance between price stability and the “double mission” of full employment.
On the one hand, although the inflation rate in the United States has dropped from a high level, the core inflation is still around 3%, which is significantly higher than the target of 2%; On the other hand, various indicators of the job market are sending cooling signals, with labor demand and job vacancies falling, and the unemployment rate rising slightly from a multi-year low.
Powell pointed out that artificial intelligence (AIIt may be one of the factors of a slowdown in the labour market.
《每日经济新闻》此前报道，今年7月美国失业人数自2021年4月以来首次超过了空缺职位数量。而人力资源机构Challenger, Gray & Christmas的数据显示，仅今年前七个月，美国就有超1万个岗位的消失与生成式AI直接挂钩。硅谷资深人力资源专家Tom Zhang博士指出，裁员并非企业经营不善的“断臂求生”，而是一场旨在为股东创造更高价值的主动战略收缩。
Song Cheng-tao told reporters that, in terms of labor data, there seems not to be much controversy about the resumption of the Fed's interest rate cuts cycle.
He explained that the U.S. halved the increase in non-agricultural employment in March 2024-2025. If this data is pushed out linearly, the U.S. has experienced negative growth in non-agricultural employment in the last four months. At the same time, the jump in unemployment has also begun to arouse greater concern,These are the reasons why the Federal Reserve can cut interest rates by 25 basis points. The September interest rate cut is highly reasonable from the perspective of employment, and the market has clearly priced it.But if the rate is lowered by 50 basis points, the market will undoubtedly continue to price the loss of Federal Reserve independence.The decision to cut interest rates in September was a two-faceted mirror of politics and economics, with 25 basis points seeming a little too little and 50 too much.
Ma Tianping, a researcher at Qingdao University's Five Points Financial College, told reporters that the biggest problem in the United States now is that the absolute value of interest rates is too high, compared to the level of about 0.25% in the early years, and now the interest rate has reached 10 times or 20 times, which directly led to the sharp rise in the US government's debt payment pressure, the government's pressure on the US Federal Reserve increased accordingly, and promoted the reduction of interest rates to become an important policy demand.The Federal Reserve has entered the channel of interest rate cuts, and there should not be many people who oppose it.
Surprisingly, the spot chart shows that the Federal Reserve is only expected to cut interest rates once in 2026.This is far more conservative than the market currently expects.
But the Barclays research team pointed out to every reporter’s forecast that future interest rate cuts would be more radical if unemployment rates jumped suddenly and exceeded the forecast.
The game behind.“Trump spokesman”
Only one day to vote against.
U.S. private equity giant Apollo Global Management Company had previously anticipated that three board members would vote in favour of a 50 basis point interest rate reduction, but the market was surprised that only the new board member Stephen Milan called for a 50 basis point interest rate reduction.
Source: Visual ChinaVCG111588962726
Milan’s identity is special. He was not urgently confirmed as the Federal Reserve Chairman until September 15 local time and sworn in on September 16 local time. Prior to this, he served as chairman of the Economic Advisory Committee of the Trump administration. He claimed that his work at the White House would be “stopped” until the term of office ended next January. This also made him the first Federal Reserve Chairman to serve at the White House since 1935.
During the Senate hearing,Milan directly said Trump chose him "probably because my political views recognize him."
He not only served as a senior adviser to the Treasury Department during Trump’s first term, but was also appointed chairman of the White House Economic Advisory Committee after Trump’s return to the White House, becoming the president’s chief economic think tank.
Asked about the Federal Reserve’s independence, Powell said that while Washington is a political hub, the Federal Reserve is an exception, “our culture is deeply rooted in working on the data we receive and never consider anything else,” Powell said.
ButWithin the Federal Reserve there are huge differences about the forecast for the 2026 interest rate cuts, with two officials expecting the rate cuts to be up to four times, three officials expecting the rate cuts three times next year, and other officials expecting the rate cuts to be one.
Sima Shah, Chief Global Strategist at Trust Asset Management, said: “The next year’s spot chart is a mixture of different perspectives, accurately reflecting the confusing economic outlook, and changes in labor supply, data measurement issues, and government policy turbulence and uncertainty make it more complex.”
Former Dallas Federal Reserve Governor Robert Kaplan said a new era is coming.“We may have to get used to more disagreements in the future.”
Song said: “It’s very rare that two councillors voted against the July interest rate meeting, but it’s actually a “preventive needle” for the meeting. Powell has less than a year to resign as Chairman of the Federal Reserve, and I think the market is gradually recognizing greater macro-environmental changes, that the entire monetary policy framework of the Federal Reserve has turned to the “duff” trend after the Jackson Hall meeting.”
The Market’s Cold Thinking——
Wall Street "songs empty" beauty, gold continues to be seen well
Just before the Fed's interest rate cut boots landed, the market once fell into speculation of "cutting interest rates by 50 basis points". Standard Chartered Bank raised its forecast to support the Federal Reserve's "catch-up" interest rate cut. On the eve of the meeting, there were "mystery traders" betting on the unexpected event of a sharp 50 basis point rate cut. But Forvis chief economist George Lagarias pointed out that,A rash 50 basis point rate cut could "spook financial markets", send the wrong signal that the economic situation is "very serious" and trigger unnecessary panic.
However, this rate reduction 25 points in line with the mainstream market expectations.After the announcement of the Federal Reserve's interest rate reduction resolution, the short line of the U.S. stock rose, the dollar jumped water, and cash gold broke $ 3,700.
But after Powell's speech, the U.S. stock rebounded its previous rise, the U.S. dollar index rose again and gold fell. As of the release, the Dow Jones index rose 0.57%, the S&P 500 index fell 0.09%, the Nasdaq 100 index fell 0.21%, the U.S. dollar index rose 0.4% to 97,04, and the cash gold fell 0.85% to $3658.48/ounce.
For the follow-up trend of the market, the market attitude is different.
Ed Yardeni of Yardeni Research issued a “bubble” warning, saying that injecting additional relaxation into an economy that is not weak could trigger a speculative rise away from the basics and ultimately lead to sharp adjustments.Instead of solving the employment bottleneck, interest rate cuts may bring investors' FOMO sentiment (phobia of missing out) and valuation bubbles.
JPMorgan strategist Mislav Matejka also stood in the "empty" queue. He said that although U.S. stocks had previously ignored weakness indicators and hit multiple record highs,But that trend could reverse once the Fed cuts interest rates。 In his report, he wrote: "Once the easing policy is resumed, the stock market may become more cautious and will account for more downside risks.”
Morgan Stanley, on the other hand, issued a warning of “exhausting profits”.They anticipated that the stock market could face pressure from short-line profit returns as rates have been fully digested by the market, and that the stock market had previously pushed its index to a new high.Only a moderate rate reduction of 25 basis points, the stock market could drop slightly”。
Stuart Kaiser, head of U.S. equity trading strategy at Citi, pointed the finger at weak employment data. He called the weak employment report in August a "negative growth signal", which was "stronger than the benefits brought by interest rate cuts". He warned that if employment continues to slow down and the unemployment rate continues to rise, the impact on the stock market will be greater than the short-term boost brought by loose monetary policy.
He told reporters that the U.S. economy is currently in a slightly weak state. Although the stock market has not fallen into weakness, the momentum of rapid rise has slowed significantly. At this time, interest rate cuts help boost stock market confidence. The U.S. Federal Reserve has gradually entered a continuous interest rate cuts channel, rather than a one-off 50-point massive interest rate cuts, which does not constitute a profitable outcome.A one-time sharp decline could cause markets to worry about the underlying worsening of the economy, while slow interest rate cuts would keep the markets in the expectation of a “continuation of policy easing.”
For the two major assets of the US dollar and gold, analysts expressed unanimous expectations: interest rate cuts will keep the US dollar under pressure, while the allocation value of gold will continue to be optimistic.
Karl Schamotta, chief market strategist at Corpay）“The dollar trading tone is heavy. It is thought that Jerome Powell and his colleagues have mitigated the risk of inflation and are clearly inclined to support the labor market.Traders are preparing for the fall of the dollar.”
Under the backdrop of the weak dollar, gold has become a "champagne" for market shelter and asset allocation.Zaner Metals vice president and senior metal strategist Peter Grant said: "The space for gold to rise is great, with a short- to medium-term target of around $3600 to $3800. by the end of the first quarter of next year, the price of gold may even reach $4,000."
Ma Tianping also believes that gold has strong allocation value: on the one hand, the weakening of the US dollar supports the price of gold denominated in US dollars; On the other hand, there is a certain bubble in the U.S. stock market, while the demand for U.S. bonds is under pressure due to factors such as the difficulty of fundamentally alleviating inflation, changes in international relations, and the reduction of U.S. bond positions by some central banks. Market safe-haven demand and asset allocation adjustments are driving gold to strengthen.
From historical data, we can also see the effects of the Fed's interest rate cuts on the market.
From 1980 to 2020, the U.S. has experienced a total of nine cycles of interest rate cuts in history.Of these nine rounds of interest rate cuts, the U.S. stock has experienced four times, respectively, the U.S. stock has experienced the "black Monday" in October 1987, the Internet bubble broke in 2001, the sub-credit crisis in 2007 and the new corona epidemic in 2020.
When the Federal Reserve enters the interest rate cuts cycle, the dollar often faces downward pressure. In the nine-round rate cuts cycle in history, the dollar has fallen six times. For example, during the rate cuts cycle that began in 1984, the U.S. economy did not experience a recession at the time, but the decline in the dollar was most noticeable, falling by 27.3 percent. Following that round in 1989, the dollar fell 22.1 percent.
The trend of gold is obviously opposite to that of the US dollar. It has risen six times in the nine rounds of interest rate cut cycles. Among them, in the two rounds of interest rate cut cycles started in 2001 and 2007, gold performed particularly well, rising by 28.4% and 16.6% respectively.
The Fed's interest rate cuts, far more than a simple interest rate adjustment, whether it is the Federal Reserve's challenge of independence, or Wall Street's fierce debate around the "bubble" and "benefit exhaust", each fluctuation of market sentiment may be amplified, and the rise of hedge assets such as gold, may be predicting a new global asset allocation tide.
(Disclaimer: The content and data of this article are for reference only and do not constitute an investment recommendation, please check it before use.)
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Edited||| King Carter Lancelot English DuPont
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