Important information last night and this morning (July 31-August 1)
The Federal Reserve kept the benchmark interest rate unchanged, suggesting that it may cut interest rates as early as September
● The Federal Reserve ended its two-day monetary policy meeting on July 31 and announced that it would maintain the target range of the federal funds rate at 5.25% to 5.5%. This is the eighth consecutive meeting since September last year that the Federal Reserve has kept interest rates unchanged, in line with market expectations. The Federal Open Market Committee, the decision-making body of the Federal Reserve, said in a statement issued after the meeting that day that inflation has eased over the past year, but it is still at a relatively high level. In recent months, "more progress" has been made in achieving the 2% inflation target. In the statement of the June meeting, the Fed's wording was "modest progress" in fighting inflation.
● Federal Reserve Chairman Jerome Powell said at a press conference after the meeting that the risk of unexpected increases in inflation has decreased as the labor market cools, and the downside risks in the labor market "are now real." He said that although Fed officials have not yet decided on future actions, if data show that inflation continues to ease, interest rate cuts may be implemented as early as September. Powell said: "We are getting closer to the right time to cut interest rates, but we are not quite there yet. If the criteria are met, we may discuss lowering the policy rate as early as the next meeting in September."
● The Chicago Mercantile Exchange's Fed Watch tool shows that the probability of a 25 basis point rate cut in September is 90.5%, and the probability of a 50 basis point rate cut is 9.5%. In addition, the Fed may further cut interest rates at its November and December meetings, each by 25 basis points.
