Federal Reserve Meeting Notes: This hawkish rate cut has led to significant declines in the US dollar, US Treasury bonds, US stocks, gold, and Bitcoin.

At this meeting, the Federal Reserve cut interest rates by 25 basis points to a range of 4.25%-4.5%, as expected. The overnight reverse repurchase tool was technically adjusted to the lower bound of the federal funds rate range. The wording of the meeting statement has been adjusted, reflecting that the FOMC has changed its considerations regarding the 'pace' and 'magnitude' of future policy implementations. There was also a divergence in voting, with some members opposing a rate cut in December.

Economic forecasts clearly reflect concerns about inflation risks, and the Fed's risk balance has evidently tilted back towards inflation. The dot plot only suggests two rate cuts next year, displaying an absolute hawkish tendency.

In his opening remarks at the press conference, Powell mentioned a 'more neutral setting' and expressed 'caution' regarding further rate cuts, leaning towards a hawkish stance.

The US dollar/VIX surged, while US Treasury bonds, US stocks, gold, and Bitcoin saw significant declines.

Economic forecasts and the dot plot

The economic forecast for 2024/25 has been revised upwards, the unemployment rate forecast has been lowered, and the inflation forecast has been raised, with a significant increase in the inflation forecast for 2025.

The dot plot only indicates two rate cuts for the entire year next year, showing a strong hawkish tendency.

In fact, every market downturn presents an opportunity; when there is no risk, it also means there are no returns.

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