On September 17, local time, as predicted by public opinion, the Federal Reserve announced that it would cut the federal benchmark interest rate by 25 basis points to a range of 4.00% to 4.25%. This is not only the first interest rate cut since the end of 2024, but also a "spotlight meeting" amid a weakening job market, high political pressure, and high attention from global markets. From statements to dot plots, to Chairman Powell's press conferences, the signals released are both policy direction and an attempt to express the Fed's position of defending its independence.

The Fed announced interest rate cuts for the first time in nine months.

Lowering interest rates: weak labour markets and political storms

On September 18, last year, the Federal Reserve launched the most remarkable interest rate reduction cycle with a scale of 50 basis points; and on September 17, a year later, the Federal Reserve again chose September "to take action", but this time, only symbolically 25 basis points. Only a year later, the same rate reduction, strength and atmosphere are very different, this contrast can be said to be a great window to observe the changes in Federal Reserve policy and the US economic and political environment.

Last fall, the U.S. economy clearly showed a cooling head, and the policy environment was relatively simple, and the U.S. Federal Reserve decided to reduce interest rates by 50 basis points, larger than market expectations, releasing the determination to avoid a hard landing.

The rising unemployment rate and the slowing recruitment have made the job market the worst downside risk for the Federal Reserve. Inflation has eased, but it is still roaming above the goal. The political atmosphere is more complicated. The Trump administration has repeatedly demanded to speed up the rate of interest and even influence the board candidates, making the Federal Reserve's independence the focus again. It is in this context that the Federal Reserve has made a cautious move of reducing interest rates at 25 base points, not only for economic considerations, but also to express its independence gesture.

¡÷ The Wall Street Journal reported that Federal Reserve Chairman Jerome Powell mentioned "downside risks" six times at a press conference in July, saying that interest rate cuts are reasonable given changes in the risk balance

Economic Forecast Summary and Point Chart: Moderate easing shows differences

If the interest rate cut statement releases the current policy attitude, then the economic forecast summary (SEP) and dot plot reveal the future path. The SEP and dot plot published at this meeting revealed several key signals.

First of all,within the yearReturn toThere were two rate cuts¡£Most members expect that in the remaining two meetings this year, there will be a drop of 25 basis points each. This means that before the end of 2025, interest rates may drop to the range of 3.50% to 3.75%. This gives some hints or answers to the "how much and how many times" speculated by public opinion.

Secondly,Long-term interest rate expectations¡£The dot plot released this time shows that the committee members believe that interest rates will slowly decline in the next two years, and are expected to be roughly 3.50% ~ 3.75% in 2026 and 3.25% ~ 3.50% in 2027. In the dot plot released in June this year, the committee members predicted that the interest rate will be about 3.75% ~ 4.00% in 2026 and about 3.50% ~ 3.75% in 2027. The neutral interest rate of around 2.5% (which neither stimulates nor suppresses the balance point of the economy) generally believed by Fed officials is also higher than the inflation target of 2%, sending a clear signal that the Fed is unwilling to be excessively loose.

and finally,Members are obviously divided¡£The new board of directors, Milan, advocated a more substantial rate reduction of 50 basis points at a time, while the majority of committees chose a gradual decision, which eventually formed a decision of 25 basis points. The distribution of the spot chart highlighted the differences within the Fed. At the press conference, Powell also acknowledged the differences within the committee, but stressed that the majority of committees believed that gradual succession was the most stable approach, and said that this was precisely the characteristic of the Federal Open Market Committee ¨C achieving the widest possible consensus through the collision of multiple opinions.

The newly nominated Federal Reserve Chairman Milan opposed the reduction of 25 base points and supported the reduction of 50 base points.

Powell Press Conference: Three points of view

In the reporter's question-and-answer section, Powell's remarks became the focus of market interpretation, and the public opinion captured several key points from his remarks.

Powell made it clear that a larger reduction of 50 basis points was not widely supported, and 25 basis points were ¡°the right choice under risk management.¡± He revealed that most committees supported minor adjustments, which is also the reason why the 25 basis points were ultimately decided.Rejecting the big ass, emphasizing the gradual control.Powell is to tell the market that this is not only the adjustment of interest rates, but also the stabilization of the expected move, to avoid the market mistake that inflation has been completely resolved, misreading the Federal Reserve to enter a comprehensive drainage.

In addition, Powell bluntly stated that this interest rate cut is to deal with the downside risks caused by the weak job market, rather than indicate that inflation has completely subsided. This statement means that the Fed's "dual mission" of resisting inflation and ensuring employment is being fine-tuned: in the past few years, it emphasized the priority of anti-inflation, but now it is gradually shifting to balance or even bias towards employment.Stable employment is a priority.This means that if future employment data continues to deteriorate, the Fed¡¯s rate cuts may be faster rather than slower.This is a re-balance of a strategic gesture, in other words, Powell wants to tell the market that the rate cuts are just a preventive relaxation of ¡°preventing downwards.¡±

Faced with reporters' questions about the pressure of the Trump administration, PowellPublicly defend independencePowell insisted that the Federal Reserve¡¯s policy decisions were ¡°data-based, not political.¡± This was not only a routine statement, but a clear response under high political pressure, trying to show that the Federal Reserve is still struggling to uphold its core position as an independent central bank.

Overall, Powell¡¯s core task at this press conference was to shape a gradually controllable, independent and autonomous policy image between external pressure and internal differences.

¡÷ The New York Times reported that Powell said that balancing persistent inflation and a weak labor market at the same time is an extremely challenging situation

Release signal: Open carefully, the front road is not blocked

Analysts generally believe that the rate reduction released a triple signal.

As Powell said, one of the main considerations for lowering interest rates is the downward pressure caused by weak employment, and therefore the corresponding signal is:PoliticallyPolicy turn.

Powell¡¯s speech was also expressed.Progressive pathThe idea, compared to the 50 basis points of the "Great Turn" in 2024, this time clearly emphasizes gradual and cautiousness. Powell clearly rejected a larger rate reduction, trying to send a "stable controllable" signal, clearly telling the market that although the relaxation has been started, the pace is still cautious, do not misread the rate reduction as opening the "watering mode".

In addition to the policy orientation itself, what is more subtle isunder political pressure.The fears will continue.The rate reduction itself is a balancing tactic, the Federal Reserve must both respond to employment pressure and resist political pressure. Powell's statement is more like a double signal: on the one hand telling the market that the Federal Reserve will gradually relax, and on the other hand telling the White House that the Federal Reserve will not be forced to "surrender".In the short term, the rate reduction will ease borrowing pressure, support employment and consumption; in the long run, the risks of inflation recovery and political intervention doubts will still leave the Federal Reserve every step like a dance on a thread.

From the sharp sharp turn of cutting interest rates by 50 basis points on September 18, 2024, to the cautious temptation of cutting interest rates by 25 basis points on September 17, 2025, this not only reflects the evolution of the economic situation, but also reflects the Fed's position in the gap between politics and the market. balancing technique. The previous time was an emergency avoidance of the risk of a hard landing of the economy, but this time it was a careful adjustment under the shadow of employment pressure and political intervention. For the market and the world, this is not only a technical decision about interest rates, but also a deep game about central bank independence and policy credibility. (CCTV reporter Wu Weihong)