The Federal Reserve significantly cut interest rates by 50 basis points! The target range for the federal funds rate is lowered to 4.75%-5%.

U.S. stocks surged in the short term! Gold prices continue to hit new highs!

The United States has officially entered a rate-cutting cycle, marking the first rate cut since the Federal Reserve initiated the current tightening cycle in March 2022.

From March 2022 to July 2023, the Federal Reserve raised rates 11 times consecutively over more than a year, with a cumulative increase of 525 basis points. Since July 2023, it has kept the policy rate unchanged at a high level not seen since 2001 during eight consecutive meetings.

Commentary: Bullish on the financial market.

Due to the rate cut, corresponding economic indicator expectations have also changed,

Regarding interest rates:

The Federal Reserve expects the federal funds rate to be 4.4% by the end of 2024, and 5.1% in June.

The expected federal funds rate by the end of 2025 is 3.4%, and 4.1% in June.

Regarding inflation:

The expected core PCE inflation for 2024 is 2.6%, and 2.8% in June.

The expected core PCE inflation for 2025 is 2.2%, and 2.3% in June.

The expected PCE inflation for 2024 is 2.3%, and 2.6% in June.

The expected PCE inflation for 2025 is 2.1%, and 2.3% in June.

(The long-term target is 2.0%)

Regarding GDP:

The Federal Reserve expects the U.S. GDP growth rate for 2024 to be 2.0%, and 2.1% in June.

The expected U.S. GDP growth rate for 2025 is 2.0%, and 2.0% in June.

Regarding the unemployment rate:

The Federal Reserve expects the unemployment rate for 2024 to be 4.4%, and 4.0% in June.

The expected unemployment rate for 2025 is 4.4%, and 4.2% in June.

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