FOMC Statement: Highlights of the Federal Reserve FOMC Statement and Powell's Press Conference

1. Interest rate decision: The federal funds rate was cut by 50 basis points to 4.75%-5.00%, the first rate cut since March 2020.

2. Statement Overview: The wording "it is not appropriate to lower the target range of interest rates until there is more confidence that inflation continues to move toward 2%" was deleted. Fed Governor Bowman supports a 25 basis point rate cut.

3. Interest rate outlook: The Fed's dot plot raised its expectations for rate cuts this year to four times and another four times next year. New data, prospects and risk balance will be assessed when considering further interest rate adjustments.

4. Inflation outlook: Upside risks have weakened and it is continuing to move toward the 2% target. The risks to employment and inflation targets are balanced.

5. Economic outlook: Slightly lower this year's GDP forecast, comprehensively raise unemployment rate forecasts from 2024 to 2026, and lower PCE and core PCE forecasts for the past two years.

Powell's press conference:

1. Interest rate outlook: Decisions will be made at meetings; if the economy remains robust and inflation remains stubborn, policy adjustments may be made more slowly. Rate cuts can be fast or slow or even suspended. Don't regard a 50BP rate cut as the norm.

2. Inflation outlook: The upside risk of inflation has weakened, and the fight against inflation has not been declared a victory. Housing inflation is part of the drag on the economy.

3. Economic outlook: The overall economy is strong and is committed to maintaining strong economic development. The unemployment rate has risen, but it is still low. There is no sign that the possibility of a recession has increased.

4. Market reaction: From the announcement of the resolution to Powell's speech, gold first rose and then fell, once standing above the historical mark of $2,600; the three major U.S. stock indexes turned down, completely erasing the gains since the interest rate resolution. The dollar weakened and then rebounded strongly, and the U.S. Treasury 2Y yield once fell 11BP before rebounding.

5. Latest expectations: The latest data from CME shows that the probability of the Federal Reserve cutting interest rates by 25 basis points in November is 63.6%, and the probability of cutting interest rates by 50 basis points is 35.3%.