What are the impacts of the 'Black Swan Event' triggered by the Federal Reserve's interest rate cut that we must recognize?
What transformed the Federal Reserve's decision to cut interest rates by 25 basis points, which was originally anticipated, into arguably the biggest 'Black Swan' event in the financial markets before the end of 2024?
With a vote of 11 in favor and 1 against (Harmark leaning towards keeping the rate unchanged), the Federal Reserve lowered the federal funds rate to between 4.25% and 4.5%!
However, Chairman Powell stated that 'the pace of future monetary policy adjustments will slow'. According to new forecasts, there may only be two rate cuts throughout next year. Powell also pointed out that the overall economy is currently 'robust', wages are at a 'healthy and sustainable' level, and we have 'avoided an economic recession'. Furthermore, the current employment rate is not at a concerning level, and upcoming monetary policy will still look for 'economic data and inflation data'. Additionally, regarding tariff issues, he mentioned the need for patience and a careful assessment.
Moreover, Powell indicated for the first time at the press conference following the interest rate meeting that the Federal Reserve does not intend to add Bitcoin to its balance sheet.
'The Federal Reserve is not allowed to hold Bitcoin. The Federal Reserve Act specifies what we can own, and we do not intend to seek a change in the law. This is something for Congress to consider, but the Federal Reserve has not sought to make changes.'