The Federal Reserve (FED) Latest Developments in Plain Language

1️⃣ Interest rates unchanged: Approved unanimously for the third consecutive time not to adjust interest rates (4.25%-4.5%), currently in a wait-and-see mode. Powell stated that no one knows whether to raise or lower in the future, and quick action may only occur when the economy faces issues, but there is a possibility of interest rate cuts this year.
2️⃣ Economic Situation:
• The economy is currently quite stable; although the GDP data has some fluctuations, it is generally okay.
• The unemployment rate remains low, but wages are rising slowly.
• Inflation is still a bit high (the issue of rising prices hasn't been completely resolved).
• Future risks: The likelihood of economic downturn and inflation rebound has increased.
3️⃣ Tariff Bomb: Special Mention of the Impact of Trade Wars
• Tariffs have not significantly dragged down the economy yet, but they will raise prices.
• If the United States continues to raise tariffs, prices may rise significantly.
• Subsequent trade negotiations may bring significant changes (implying that the China-US negotiations are crucial)
4️⃣ Market Reaction:
• Gold Roller Coaster
• The dollar has appreciated in value.
• The stock market is generally down.
• The bond market shows a slight cooling of investors' expectations for interest rate cuts.
5️⃣ Presidential Relations:
• Powell said Trump's call for interest rate cuts does not affect decision-making.
• Refused to respond to whether he would be dismissed by Trump
• The destination after stepping down next year remains a mystery.
[Key Points of Future Trends]
• Interest rate hikes are basically out of the question, and rate cuts will depend on the situation: action will only be taken if the economy significantly worsens or inflation gets out of control.
• Price pressures may persist: short-term inflation could be pushed up by tariffs, but the long-term outlook is uncertain.
• Economic risks are hidden: Although the data is fine for now, trade wars/global economy could bring shocks.
• The market has entered a period of entanglement: investors are worried about both economic recession and the rebound of inflation, and are waiting for more signals.