Summary of FOMC interest rate cut meeting and Powell press conference (vernacular interpretation) 1、 FOMC Statement Core Content How is the interest rate determined? Set between 3.5% and 3.75%, not adjusted. This also means that the three consecutive interest rate cuts that started in September last year have temporarily come to a halt this time. Is there a disagreement in the voting? have 10 people support keeping interest rates unchanged, 2 people oppose it, The opponents are directors Milan and Waller, who believe that an additional 25 basis points should be lowered. When will we cut interest rates next time? It was not mentioned in the statement. It is emphasized that whether to adjust interest rates in the future depends entirely on economic data, overall prospects, and various risk situations for evaluation, and a final decision will not be made. How is the economic situation? The evaluation of the economy is higher than before, saying that the economy is growing at a steady pace, but there are still many uncertain factors and risks in the future. Is the job market okay? The previous statement that 'the risk of employment downturn has increased' has been deleted, and now there are some signs of stabilization, and the job market is slowly showing signs of stabilization. How is inflation controlled? It's still a bit high and hasn't completely dropped to the ideal level. 2、 Key content of Powell's press conference How should we view the interest rate in the future? At present, interest rates are in the upper middle of the "neutral range" that neither stimulates nor suppresses the economy, and there is no fixed policy path. Everything depends on data feedback. If the inflation caused by tariffs reaches its peak and starts to decline, it means that there are conditions to relax policies; As for the interest rate hike, no one assumes it is a highly probable event and there is no need to consider it for now. In addition, most of the committee members who do not have voting rights also support this interest rate decision. Is the economic outlook optimistic? Powell believes that the foundation of the US economy is very solid, and the outlook is better than before. The overall situation is stronger than predicted in December. Will the job market stabilize? The labor market was gradually weak before, but now it may need to stabilize. Moreover, the risks of inflation and employment have decreased compared to before. 4. What is the subsequent trend of inflation? Still slightly higher than the target value, core personal consumption expenditure (PCE) inflation may rise to 3% in December; The inflation caused by tariffs is expected to peak in the middle of this year. How to respond to political topics? When it comes to sensitive topics, he keeps silent and hasn't determined what he will do after his term as Federal Reserve chairman ends. He also suggests that the next chairman should not get involved in politics. 6. Other noteworthy points? The real estate market is still relatively weak; I haven't seen any data showing that investors are hedging against risks related to the US dollar; I haven't read too many macro level signals from the rise in gold prices either. Has the market's expectation of interest rate cuts changed? The overall expectation of interest rate cuts has been slightly affected, but the overall direction has not changed - everyone still believes that there will be a 46 basis point interest rate cut for the whole year, and the probability of a rate cut in June is about 60%. What is the market's reaction? During the period from the announcement to Powell's speech, spot gold and silver fell first and then rose, while the trend of the US dollar was exactly the opposite; Among them, the gold price hit a record high, with a fluctuation of more than $60, while the yield of US treasury bond bonds and US stocks only fluctuated slightly, without much movement. ———————— Key points of Powell's press conference: 1. Monetary policy: Powell stated that raising interest rates is not a fundamental assumption for anyone's next steps. 2. Inflation: The risk of inflation has to some extent subsided. By December 2025, the core PCE inflation rate has reached 3% for 12 months. The high inflation reflects to some extent the impact of tariffs on pushing up commodity prices. Inflation expectations reflect confidence in the 2% target, and long-term inflation expectations remain consistent with the target. It is not yet possible to declare victory in the fight against inflation in advance. 3. Employment: Employment risks have to some extent subsided. The unemployment rate has shown signs of stabilizing to some extent. After experiencing gradual softening, the labor market may tend to stabilize. Recruitment, job vacancies, and salary growth rates have hardly changed. 4. Tariffs: Most of the impact of tariffs has already been transmitted to the economy, and tariff inflation is expected to subside by mid-2026. If we see a peak in the impact of tariffs, it indicates that we can relax our policies. 5. The weakening of the US dollar: No comment. There is no data indicating that investors hedge against US dollar risks. Do not overinterpret the macro information released by precious metals. 6. Finance: There is no doubt that the US debt path is unsustainable. 7. AI and Technology: In the short term, artificial intelligence (AI) may eliminate employment opportunities/AI may lead to job obsolescence. 8. Powell's departure and Federal Reserve independence: There are no plans for his departure after the end of his term as chairman in May. Refusing to comment on the stance of key Republican candidate Thom Tillis on Capitol Hill, who has vowed to obstruct the nomination of the Federal Reserve Chairman; Refusing to comment on the stance of key Republican candidate Thom Tillis on Capitol Hill, who has vowed to obstruct the nomination of the Federal Reserve Chairman; The legislative arrangement of Federal Reserve independence has enabled the Fed to serve the United States well; We do not believe that the Federal Reserve will lose its independence, and we are strongly committed to maintaining it; The lawsuit against Federal Reserve Governor Lisa Cook may be the most significant case in the history of the Federal Reserve; It will be suggested that the next Federal Reserve chairman stay away from politics.