Key points of Lao Bao's speech at a glance

1. Statement overview: The wording remains largely unchanged, with a decision to reduce interest rates by 25 basis points passed by a vote ratio of 11-1, with Hamak supporting the pause in rate cuts. The ON-RRP was lowered by 30 basis points.
2. Interest rate outlook: The "extent and timing" of further rate cuts will be considered. The dot plot has been adjusted upwards, indicating two rate cuts in each of the next two years, but some officials have serious disagreements.
3. Inflation Outlook: Postponing the time to achieve 2% inflation to 2027, and raising the expected level for 2024-2026. Most officials expect the risk tendency to be upward.
4. Economic Outlook: Slightly lower the unemployment rate expectations. The wording for steady economic growth remains unchanged, with the actual GDP growth rate expectations for this year and the next raised, from 2% to a significant 2.5%.
Powell press conference:
1. Interest rate outlook: When considering interest rate adjustments, caution can be exercised. The change in the wording of the statement indicates that it is in or near the stage of slowing down interest rate cuts, and it seems unlikely to raise interest rates next year. If inflation cannot continue to move towards 2%, interest rate cuts can be slowed down. Slowing down interest rate cuts too much may hit the economy and employment.
2. Inflation Outlook: It may take another year or two to reach the target; the risks and uncertainties are high; discussions are underway on how tariffs can drive inflation.
3. Economic Outlook: The overall economic performance is strong, with faster-than-expected economic growth in the second half of the year, and there is no reason to believe that the possibility of an economic downturn is higher than usual.
4. Employment prospects: The labor market remains robust and is not a significant source of inflationary pressure. It has not cooled to a worrying extent and will continue to be monitored.
5. Other remarks: (regarding Bitcoin reserve policy), the Federal Reserve does not allow nor intend to hold Bitcoin. Today's interest rate decision is a difficult choice.
6. Market reaction: During the period from the announcement to Powell's speech, spot gold unilaterally plummeted by $56; the US dollar index has cumulatively risen by 110 points since the announcement, reaching a two-year high; the US 2Y bond yield has risen by 15BP; the Nasdaq's decline has expanded to 3%; Bitcoin has fallen by over $5000.
7. Latest Expectation: Traders' pricing for the Fed's rate cut continues to decrease, with only a 37 basis point cut expected in 2025, far below the pre-meeting 75 basis points.