Early morning! The Federal Reserve, a blockbuster announcement!
This morning, the Federal Reserve released the contents of the minutes of the September interest rate meeting. The Federal Reserve decided to cut interest rates by 50 basis points in September, but this decision was not unanimously passed internally. Most officials agreed to a 50 basis point rate cut, but some officials felt that a 25 basis point rate cut would be enough. They felt that they should take it slowly, which is more in line with the path of monetary policy normalization.
The minutes said that if inflation continues to move closer to the 2% target and the job market remains strong, the Federal Reserve may adopt a more neutral monetary policy stance in the future.
As soon as the news came out, U.S. stocks rose across the board, and the S&P 500 index hit a record high. Chinese stocks also rebounded, and the decline of the Nasdaq China Golden Dragon Index narrowed.
Now the market expects that the Federal Reserve is almost unlikely to cut interest rates in November, and it is expected to cut interest rates by about 47 basis points by the end of 2024, which is much lower than before.
The U.S. CPI data for September is also coming out soon, and the market expects the year-on-year growth rate to slow down. Meanwhile, mortgage rates and 10-year Treasury yields in the U.S. have both risen.
Some analysts and experts believe that given the strength of the U.S. economy and continued inflation, the Fed may only cut interest rates once more for the rest of the year, totaling 25 basis points.
Overall, while there are disagreements within the Fed on rate cuts, the overall tone of the market on the rate cut cycle has not changed, which is good news for the stock market. At the same time, the market's expectations for future rate cuts by the Fed have cooled, and no significant rate cuts are expected in the short term.
