Several key messages from last night’s Fed meeting:
1. The U.S. core CPI fell to a three-year low in May, lower than expected, and expectations for an interest rate cut have increased.
2. The Federal Reserve kept interest rates unchanged for the seventh consecutive time, in line with market expectations.
3. The dot plot predicts only one 25 basis point interest rate cut in 2024, and four rate cuts in 2025.
4. The inflation rate has eased significantly, but it is still too high, and interest rates are not expected to be cut until inflation is sustainable towards 2%.
5. It has not yet reached the stage of announcing an interest rate cut date, and monetary policy will be relaxed as appropriate in the future.
The U.S. CPI was lower than expected, and the market immediately became excited again. It can only be said that the expectation management of the United States is too strong, but it is obvious that the Federal Reserve still has no urgency to cut interest rates. Three important indicators:
1. Inflation still has not reached less than 3%. Even if the amount is advanced, there is still a long way to go from the promised 2%.
2. The unemployment rate has not increased significantly, and employment continues to show strong performance.
3. Not only is there no crisis in the financial system, there may also be overheating after excessive currency issuance. After all, no one thinks there is a bubble during the upsurge cycle, which is why financial clearing cycles always appear.
Although Lao Bao's speech did not go as far as the market expected, it does not affect the overall situation!