Amid five consecutive declines in U.S. stocks, the Fed urgently spoke out, releasing dovish signals, directly assisting U.S. stocks in collectively stopping the decline and rising on Friday, with the Nasdaq soaring 1.77%.
Asking how the Fed is timing its moves seems to have warmed market expectations for rate cuts.
Then on Friday, U.S. Treasury yields soared to 4.60%, the dollar was pressured below the 109 mark, and all three major U.S. stock indices began to rebound.
The U.S. stocks had been plunging in the second half for the first four days, so at the beginning of the second half on Friday,
Fed's Barkin directly released dovish signals, stating that the outlook for the U.S. economy is optimistic, the labor market is strong, and inflation risks persist.
He said that the current interest rate level remains sufficiently restrictive to lower inflation by 2025 without needing to impose such strict constraints as before to control inflation.
The market interpreted this speech as suggesting there is still room for future rate cuts.
Fed's Kooler stated that there is a view that we can slow down and take a more gradual approach while observing economic data to determine whether stubborn inflationary pressures will begin to ease again.
Regarding the impact of the incoming Trump administration's policies on the economy,
Federal Reserve Speech:
Kooler stated that due to the many uncertainties, it is difficult to judge how the situation will develop. She said: There are many situations that everyone is considering.
Earlier on Friday, Richmond Fed President Thomas Barkin stated that as Trump's tariff policy is finalized, uncertainty should decrease, while inflation risks are greater.
As Trump's time in office approaches, the Fed will inevitably respond and adjust its policies. Analysts say there are several aspects to consider:
1. Cautious policy stance. The Fed tries to avoid confrontation with Trump while addressing the potential inflation brought about by his policies. Powell privately urged Fed officials to 'act cautiously.'
2. Closely monitor economic data and outlooks. The Fed stated it is considering further adjustments to the target range for the federal funds rate.
3. The market generally believes that, influenced by Trump's policies, the Fed's future rate cuts may be slower, fewer, and more cautious.