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The Federal Reserve's interest rate cut caused "fighting to each other" in Asian stock markets, and the degree of division of interpretation was far beyond expectations!
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Hello everyone, today XM Foreign Exchange will bring you "[XM Group]: The Federal Reserve's interest rate cut causes "fighting to each other" in Asian stock markets, and the degree of division of interpretation is far beyond expectations!". Hope it will be helpful to you! The original content is as follows:
Under the hustle and bustle, the stock markets of Asian countries have been severely differentiated, showing that the Fed's dovish stance has not gradually become clear. Fed Chairman Jerome Powell delivered a speech at a press conference in the early morning of Thursday. On the same day, the Federal Reserve's interest rate agenda meeting announced a 25 basis point interest rate cut. The meeting included many xmaccount.complex links and branch lines. The plot rich enough to make a short drama with multiple episodes, and the degree of division of its interpretation was far beyond expectations!
In order to clarify the core logic of the market, the following are the key points extracted from the exchange content and research reports of senior Federal Reserve observers:
October rate cuts became the "minimum resistance path", and the December action is doubtful
LH Mayer/Monetary Policy Analytics economist Kevin Burgett predicts that the Federal Reserve will implement another 25 basis points rate cut in October. He clearly pointed out that the October interest rate cut is the "policy path with the least resistance" - because before the next meeting of the Federal Reserve's Interest Rate xmaccount.committee (October 28-29), only one employment data will be released, and the data variables are limited.
Burgit believes that the uncertainty is significantly higher as to whether December will continue to decline. By then, Fed officials will have sufficient economic data and more references to policy decisions. "The October rate cut does not mean that the policy direction in December has been locked," he added.
The current financial market pricing shows that it is likely to see two more times this yearRate cuts at 25 basis points. Regarding the interest rate path in 2025, the Fed has significantly different views with market expectations: the Fed internally expects interest rates to remain around 3.4%, while the market has priced the interest rate below 2%.
Jeffrey Rosenberg, chief fixed income strategist at Blackrock, analyzed that the core of this divergence is that the market is playing ahead of schedule to move policy shifts that Fed Chairman Powell's successor may implement.
Official consensus: Tariff inflation is a "one-time shock" and there is no need for overreaction
Powell clearly sent a signal at the press conference: the market's concerns about tariffs causing a spiral upward trend in inflation are gradually easing.
"The possibility of current inflation continuing to surge has been significantly reduced," Powell said.
Burgit further pointed out that judging from the economic forecast released by the Federal Reserve, "all officials have formed a consensus" - there is no need to pay too much attention to tariff-driven phased inflation, and policy formulation will break out of short-term price fluctuations.
“There is no clear factor that can reverse this perception,” Bergit stressed. Even though the labor market continues to tighten balance, wage growth, which used to be a driving force for inflation, has been weak, which is directly related to the structural problem of the White House's anti-immigration policy that has led to a restricted labor supply.
The Fed "grouped" to support Powell, and the signal of defending independence was clear
Before the meeting, most Fed observers predicted that there would be a disagreement situation where multiple officials voted against it. But the final vote showed that only Stephen Miran, chief economist of the Trump administration and new member of the Federal Reserve, voted against the interest rate cut resolution.
Padhraic Garvey, head of regional research at ING, pointed out in his research report to clients: "This voting result is likely to be the active choice of other members of the Fed's interest rate xmaccount.committee - not only sending a support signal to Chairman Powell, but also essentially an indirect defense of the Fed's policy independence."
Neil Dutta, chief economist at Renaissance Macro Research, analyzed that Fed directors Christopher Waller and Michelle Bowman, who had previously promoted interest rate cuts, chose not to vote against it. The core reason is that "they focus on the core goals at the moment" - promoting other officials to recognize the policy framework of "three interest rate cuts this year" (including this rate cut).
EvercoreISI Vice Chairman Krisna Guha said, "Although there are a considerable number of officials within the Fed who oppose interest rate cuts, Powell can still gather a majority of votes for his tendency to support the policy path."
The market misreads "risk control"Rational interest rate cuts, there is a possibility of a shift in Powell's true intention?
When Powell defined this interest rate cut as a "risk management interest rate cut", the financial market immediately showed negative feedback, generally interpreting it as a signal that "the future interest rate cuts will be evaluated one by one, and the pace is uncertain."
But Guha believes that the market has xmaccount.completely misunderstood Powell's statement. In fact, the core connotation of "risk management interest rate cuts" is: the Federal Reserve can take the initiative to stabilize expectations without waiting for a clear weakening signal of the economy - this logic actually constitutes a clear positive for risky assets.
Authentic, there are currently 7 Fed officials who support no further interest rate cuts this year. "But the core camp of future policy debates will be 12 officials who advocate a further reduction in 2025, rather than 7 anti- For officials who cut interest rates," Guha added.
Feder rate resolution outlook and focus points
Non-farm employment data before October meeting directly affects the pace of interest rate cuts; at the same time, the impact of this data on the October Fed's interest rate resolution can be observed indirectly through the impact of this data on the Fed's interest rate resolution.
Thereafter, traders need to pay attention to multiple sets of U.S. employment and inflation data disclosed before December, especially employment, because the Fed Chairman said that the decision has downplayed the consideration of inflation, but the same tariff logic may provide new rhetoric for the impact of the US economy.
Whether the US president will continue to interfere with the Fed's decisions through personnel arrangements and other means, it also needs to be taken into consideration.
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