This rate cut is actually a supplement to the lack of a rate cut in July. It does not mean that there are major problems with the US economy, but rather shows the Fed's confidence in controlling inflation and supporting the economy. They believe that the economy can achieve a "soft landing".

This guidance makes market sentiment more stable, just like the market expectation management in June 2022.

The Fed "let the wind" in advance to allow the market to fully discuss and digest various negative news, ensuring that the market can transition smoothly when the actual decision is announced.

In his subsequent speech, Powell did not explicitly say that the 50 basis point rate cut was due to economic problems, but emphasized the balance between inflation and unemployment.

He believes that inflation has fallen faster than expected, which is the main reason for increasing the intensity of rate cuts.

Although Powell did not clearly state the future rate cut rhythm, judging from the dot plot, there is a high possibility of a 25 basis point rate cut in November and December.

According to CME's "Fed Watch", the probability of a 25 basis point rate cut in November is 62.2%, and the probability of a 50 basis point rate cut is 37.8%.