Charles Schwab: Federal Reserve cuts interest rates again, employment market risks become the focus

Charles Schwab Hong Kong Limited Senior Vice President and Financial Advisor Lin Changjie stated that the Federal Reserve continues to advance its accommodative monetary policy at a cautious pace, lowering the federal funds rate by 25 basis points, bringing the target range down to 3.75% to 4%. This may not be the last rate cut of the year, as it is expected that the Federal Reserve will likely cut rates again by 25 basis points at the next meeting (December 11), further lowering the rate range to 3.50% to 3.75%.

Although the inflation rate remains above the 2% target level due to tariff-related pressures and other factors, the latest decision indicates that the Federal Reserve has prioritized preventing downside risks in the labor market over concerns raised by inflation. This action follows the previous rate cut of 25 basis points in September of this year, marking the first rate cut since December 2024, highlighting the deepening concerns about the weakness in the labor market.

Importantly, the market should interpret this rate cut as a strategic adjustment rather than a comprehensive policy shift. Even though the current U.S. government shutdown temporarily affects the release of key economic data, the Federal Reserve remains committed to data-driven decision-making. For investors, the current environment provides short-term support for risk assets, but due to various uncertainties such as labor market dynamics, inflation trends, and policy uncertainties, market volatility is expected to persist