Federal Reserve's stance: cautious rate cuts, not in a hurry to loosen monetary policy
The latest meeting minutes released by the Federal Reserve indicate that officials are relatively optimistic about the current economic situation while maintaining a cautious attitude towards future monetary policy. The minutes revealed that committee members unanimously believe that if inflation continues to return to the 2% target range and the labor market remains strong, they may gradually adjust monetary policy towards a more neutral stance.
During the meeting held on November 6 to 7, the Federal Reserve unanimously voted to lower the benchmark lending rate by 0.25 percentage points, adjusting the target range to 4.5% to 4.75%. This marks the second consecutive rate cut, and there remains uncertainty in the market about whether there will be another rate cut in December. Federal Reserve Chairman Jerome Powell has previously stated clearly that the U.S. economy is performing robustly and there is no rush to cut rates. He emphasized that the central bank does not need to take action hastily and will consider further lowering borrowing costs cautiously.
It is worth noting that although calls for rate cuts are increasing, officials simultaneously warn that inflation remains above the 2% target level. The latest Consumer Price Index (CPI) report shows that the inflation rate has rebounded to 2.6%, growing 0.2% month-on-month, adding uncertainty to further rate cuts.
Source: The New York Times Federal Reserve Chairman Jerome Powell has previously stated clearly that the U.S. economy is performing robustly and there is no rush to cut rates.
Inflation and the labor market: cautiously optimistic but vigilant
The meeting minutes show that almost all committee members judged that although monthly data may fluctuate, overall data suggests that inflation is likely to sustainably return to 2%. The members cited several factors that could exert downward pressure on inflation, including weakened corporate pricing power, still restrictive monetary policy, and stable long-term inflation expectations.
However, some officials also warned that considering the underlying strength of the economy and the geopolitical risks and supply chain disruptions, the decline in inflation may be slower than expected. This means that the Federal Reserve will continue to closely monitor economic data and flexibly adjust monetary policy based on actual conditions.
Regarding the labor market, committee members are quite optimistic about the current situation. Although non-farm payrolls increased by only 12,000 in October, this is mainly attributed to storms in the southeastern region and labor strikes. The committee generally believes that the current labor market is stable, with the layoff rate remaining low and no signs of rapid deterioration.
Outlook: Data determines the direction of policy
The meeting minutes clearly indicate that if inflation continues to be above the target level, the Federal Reserve may pause its rate cut pace. Richmond Federal Reserve Bank President Tom Barkin stated directly:
If inflation remains above our target, we will act cautiously; if the unemployment rate accelerates, we may act more aggressively.
Currently, the market remains cautious about a rate cut in December. Traders slightly favor another 0.25 percentage point cut, which Minneapolis Federal Reserve Bank President Neel Kashkari considers 'reasonable.' Chicago Federal Reserve Bank President Austan Goolsbee also supports the possibility of further rate cuts.
Currently, Bitcoin is oscillating around $93,000, while Ethereum has fallen to about $3,350. Market analysts note that traders are adjusting their positions, and the volatility in the derivatives market is changing. Analysts at QCP Capital observed that the buying intent for Ethereum options has shifted from buying to selling, reflecting market concerns about potential downside risks.
The government bond market reacted subtly to this. The policy-sensitive two-year Treasury yield fell by 0.02 percentage points after the document was released, reporting at 4.25%, the lowest level in a week. The S&P 500 index slightly retraced after the release of the meeting minutes but ultimately still closed up 0.6%, reaching an all-time high.
Source: Google Finance The S&P 500 index still reached an all-time high after the release of the meeting minutes.
Experts generally believe that the future direction of monetary policy will heavily depend on the performance of inflation and employment data. The Federal Reserve will maintain high flexibility, closely monitor economic indicators, and adjust policy positions in a timely manner when necessary. For both the crypto market and traditional financial markets, upcoming economic data will become a focal point, potentially having a significant impact on asset price trends.
[Disclaimer] The market carries risks, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk.
'Bitcoin oscillates at 93,000! What did the Federal Reserve meeting minutes say? 'This data' becomes critical' This article was first published in 'Crypto City.'
