FED Cuts 25 Basis Points: Signal Already "Priced In", Market Enters Wait-and-See Phase

The early morning meeting of the FED today aligned with market expectations: a 25bps rate cut, which was completely unsurprising. The most important point for investors lies in Chairman Jerome Powell’s statements, and below are the key highlights:

1. The Current Rate Cut Cycle Is on Hold — FED Wants to Observe More Powell indicated that this rate cut might be paused, similar to the pattern of three consecutive rate cuts at the end of 2024. → This means: the FED does not want to rush, and needs more economic data before taking the next step.
2. The Easing Cycle Is Still Not Over Powell emphasized: no one in the FED is considering raising interest rates again. This suggests: Policy has shifted from “tightening” to a neutral – slightly easing stance. The risk of returning to rate hikes is very low.
3. (NFP) Data Is Distorted — The Reality Is Much Weaker According to Powell, ignoring model adjustments, actual employment could be around -20,000 per month. This means: The labor market is weakening noticeably. The FED must consider the risk of slowing growth.
4. Buying Short-Term Bonds to Ensure Liquidity The FED will increase purchases of short-term treasuries to maintain ample liquidity. → This is a dovish move, indicating the FED does not want the economy to enter a monetary tension. Subjective perspective: Powell is “more dovish than expected” Based on the overall tone, Powell is not overly hawkish, and may even be slightly “dovish” than anticipated. Key point: The decision to buy more short-term bonds is a relatively positive signal for the market. However, the likelihood of Powell continuing rate cuts in the current term is low. The market has started pricing in: Powell might be replaced by Hassett in June next year, and from the second half of 2025, the pace of rate reductions will accelerate. Implications for crypto and stock markets: 2–3 months of continued difficulty** Although the overall message is not negative, it does not suggest a major short-term trend: Liquidity may not flow in immediately. The next 2–3 months could continue to be a volatile period, easily sweeping both longs and shorts. The market will wait for: Economic data signals clearer timing for the next cut Political factors in 2025 Conclusion The FED cut rates as expected, but did not provide strong catalysts for the market. In the short term, patience is still needed — major trends are likely to emerge only when expectations for the next rate cut return, or when there are personnel changes at the FED.