Under the “double mission” of stabilizing prices and ensuring employment, the policy has tended to the latter. According to U.S. media reports, on September 17 local time, the U.S. Federal Reserve Commission will lower interest rates by 25 basis points. This is the first rate reduction by the U.S. Federal Reserve since December 2024, before the U.S. Federal Reserve has remained unmoving five consecutive times on interest rate policy. On the day after the resolution was announced, the U.S. stock exchange fell, the Dow Jones index returned 500 points, and then rose again. On Thursday, the U.S. government bond yield rose, the 10-year government bond yield fell four basis points, to $4.05%, a small high. The European Pan-Eurostat 600 index rose 0.67%, the Japanese base-day 225 index rose 1.15%,
The Fed has cut interest rates by 25 basis points, with only one vote against.
According to Bloomberg, the latest Federal Open Market Commission (FOMC) monetary policy meeting record shows that on September 17, local time, the US Federal Open Market Commission voted 11 in favour, 1 in opposition and passed a resolution to reduce the interest rate, bringing the federal fund interest rate target range down to 4%-4.25%.
The Federal Reserve said that despite inflation recovery and “still at a high level,” “the downside risk of employment has risen.” new jobs have slowed, unemployment rates remain low, but have also risen. Heather Lang, chief economist at the U.S. Navy’s Federal Credit Cooperative, warned: “Despite the inflation risk, the greater risk is now more Americans unemployed, and the downside spiral that has begun towards recession.”
The only one to vote against was Milan, a new board member nominated by U.S. President Donald Trump to take office this week, who supported a 50 basis point reduction in interest rates.
When asked about the impact of Milan’s joining the Fed on institutional independence, Fed Chairman Powell stressed that the central bank was still “strongly committed” toining its political independence.
The Fed is still "confused"
According to the CNBC website of the United States, the latest dot plot (the anonymous forecast chart of future interest rates by 19 Federal Reserve officials) shows that there are huge differences within the Federal Reserve: 10 people think that "interest rates will be cut twice or more this year", while the other 9 members think that interest rates will be cut once or less, or even at all.
Shah, chief global strategist for financial services firm Trusted Assets, said the Fed’s next year’s spotlight is more focused on different perspectives, accurately reflecting the current chaotic view of the economic outlook, while changes in labor supply, data measurement issues and government policy uncertainty will make it more complicated.
The U.S. Wall Street Journal that Fed officials are struggling to move forward in an economy that has been transformed by a comprehensive policy experiment. The tariffs imposed by Trump far exceeded its first term, increasing the cost of manufacturers and small. Some Fed officials are concerned about inflation because inflation has been higher than the Fed’s target for more than four years in a row. Others are concerned about the backdrop effects of previously significant inflation rises or will lead to an unexpected weakness in the labor market. Fed officials have been discussing how to weigh these contradictions for a whole year.
Economist Donald Cohen, who worked for the Fed for 40 years and served as the Fed’s vice chairman during the 2008 financial crisis, said: “It’s also a difficult, very complicated situation to leave the political factor behind.” “But it’s difficult for the Fed to avoid the influence of political factors in the future, according to Gregory Dako, chief economist at Annun, “History has shown that when central banks are politically influenced, economic outcomes tend to be less intentional.”
Experts: increased attractiveness of RMB assets
After the epidemic, as inflationary pressures ease, 2024 will start a wave of global central bank interest rate cuts. In addition to the Federal Reserve, the banks of Canada, the United Kingdom and Japan will also announce interest rate decisions in this week's "Global Central Bank Super Week". Yang Delong, chief economist of Qianhai Open Source Fund, believes that the Fed's interest rate cut may trigger a new wave of interest rate cuts by central banks around the world.
Guangzhou securities analyst Ro Zhiyeh analyzed that interest rate cuts will provide a certain underlying role for U.S. economic growth, but it is difficult to reverse the overall slowdown trend. he believes that the continued suppression of policies such as tariffs, immigration, and consumer and enterprise confidence weakened, determined that U.S. economic growth will still be under pressure.
After the Federal Reserve reduced interest rates, China's monetary policy had a greater adjustment space. Yang DeLong told the Global Times reporter, with the Federal Reserve reducing interest rates landed, China's central bank also has a greater space for monetary policy relaxation, and is expected to boost the economy through the reduction of interest rates and allowances, and stabilize the stock market.
In an interview with the Global Times, Ma Wei, a deputy researcher at the Chinese Academy of Social Sciences, said that we should seize this favorable time window, implement more vigorous monetary and fiscal easing, further promote the reduction of rates and interest rates, and continue to expand financial projects to accelerate the landing, enhance the Federal Reserve's favorable effect on the Chinese economy, and promote the completion of the year-round economic growth goals.
Ma Wei believes that after the Federal Reserve cut interest rates, against the background of a sharp rebound in China's stock market, the attractiveness of RMB assets will further increase, or more international capital will be attracted to return to China. For Chinese enterprises, the lower interest rate of the US dollar means that a new window of opportunity to accelerate overseas financing and lay out the industrial chain overseas is about to open.