Understanding and recognition of this interest rate decision can be elaborated from the following aspects:

Firstly, from an overall perspective, it shows a hawkish tendency. This is specifically reflected in the reduction of the estimated number of rate cuts in 2025, and the terminal rate has increased. However, the market has already anticipated this to a certain extent; although there will be shocks, the impact range is relatively limited. In the US stock market, the Dow Jones has shown a more pronounced anticipation, followed by the S&P and Nasdaq. In the cryptocurrency market, there are also expectations, but Bitcoin currently pays more attention to whether Trump's policies will have substantial measures that exceed expectations, besides being influenced by monetary policy changes.

Secondly, Powell has clearly conveyed signals to slow down the pace of rate cuts, however, he has not clearly defined the basis for pausing rate cuts in the future. Is it based on strong economic growth or the rebound of inflation? Both are within his consideration scope, and ultimately the follow-up action strategy still needs to be determined based on relevant data. Therefore, the employment and CPI data released in January for December will be crucial. Given that the Federal Reserve has now conveyed strong expectations of pausing rate cuts to the market, if the data subsequently shows a 'good' trend (i.e., a decrease in inflation rate and a weak employment situation), it will have a significant impact on market expectations, meaning that the Fed's forecasting model needs to be readjusted and recalibrated. Conversely, if the data shows the opposite trend, the market expectations will change accordingly.

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