Here is the interpretation of the interest rate decision I promised you this morning:
First of all, a direct 50 basis point rate cut is a big deal. I would have preferred 25 basis points, but unfortunately it did not go as planned. After all, 25 basis points can more directly reflect that there is no risk in the economy and everything is under control.
The 50 basis point rate cut may be because the Fed saw something that the market did not see. However, the Fed emphasized during the meeting that our 50 basis point cut does not represent what we have seen, but represents our confidence in controlling inflation and the importance of supporting the economy. From past historical experience, the Fed's support effect is still good.
Then there is my future economic situation. Market expectations and sentiments have been jumping back and forth between soft landing and hard landing, and market volatility has also increased. Whether there is a recession or not is the new anchor of the future market, but my personal opinion is the same as before. The probability of a recession this year is not high, especially when no greater risks are seen at present. Timely support can further increase the resilience of the economy.
From a medium- to long-term perspective, the US monetary policy has begun to shift from tightening to easing. It can also be said that the "turning point" of the big cycle has begun. Of course, the road to easing is still bumpy and bumpy, but the general direction needs to be grasped.
In the end, there is enough information in the general direction, but in the short term, we cannot be blindly optimistic, and we must further judge in combination with new data!
The turning point may appear when the next economic data is released. Whether there is a recession or a soft landing is clear at a glance, but according to the Fed's expectation management, the data will definitely not slap in the face. Powell's speech last night was simply impeccable. No one or any investment institution can catch any complaints. From Powell's speech, we can see that the Fed is very confident in future expectation management and economic direction!
