[Good news: the Federal Reserve announced that it will keep interest rates unchanged and may cut interest rates three times this year. Powell’s speech was dovish, U.S. stocks rose sharply, and gold hit a record high! Bitcoin and Ethereum rebound sharply]
The U.S. Federal Reserve concluded its two-day monetary policy meeting on the 20th and announced that the target range for the federal funds rate will remain unchanged at 5.25% to 5.5%. The Federal Reserve is expected to cut interest rates three times this year.
This is the fifth consecutive time the Fed has kept interest rates unchanged since September last year. In a statement issued that day, the Fed said that it would be "inappropriate" to lower the target range for the federal funds rate until it has greater confidence that inflation will continue to move toward its long-term goal of 2%. The U.S. economic outlook is currently uncertain, and the Federal Open Market Committee, which is responsible for formulating monetary policy, will continue to pay close attention to inflation risks.
Based on the economic outlook, 9 of the 19 Federal Open Market Committee members believe that the federal funds rate may fall to 4.5% to 4.75% during the year. This means that, at a rate of 25 basis points each time, the Fed may implement three interest rate cuts this year, the same as predicted in December last year. Five members expected interest rates to fall to 4.75% to 5%.
Federal Reserve Chairman Powell said at a press conference after the meeting that the Fed has not yet gained the confidence to start cutting interest rates based on the various data released, and the outlook for inflation and the economy is uncertain. If appropriate, the Fed will maintain the target range for the federal funds rate at current levels for an extended period of time. He avoided reporters' questions about whether it would cut interest rates for the first time at the May or June meeting this year, saying that the Fed would not make any commitments for future meetings and would continue to make decisions separately at each meeting.
In response to this, the U.S. stock market reacted very violently. After Powell's press conference, the three major U.S. stock indexes soared collectively. The Dow Jones Industrial Average rose by more than 540 points during the session, and the Nasdaq Index rose the most. As of the close, the S&P 500 Index rose by 0.89%, the first time in history. It rose above 5,200 points; the Dow rose 1.03% and the Nasdaq rose 1.25%, both hitting record highs. At the same time, gold prices also surged across the board, with spot gold breaking through the $2,200/ounce mark, reaching a maximum of $2,222.9/ounce, setting another record high.
