The Federal Reserve announced its third rate cut of the year on December 11 at midnight Beijing time, lowering the federal funds rate target range by 25 basis points to 3.50%-3.75%.

1. Key information on the latest rate cut decision

Magnitude of the rate cut and current interest rates:

This rate cut of 25 basis points brings the federal funds rate target range down to 3.50%-3.75%, marking the sixth rate cut since the start of this cycle in September 2024, with a total reduction of 75 basis points for the year.

Policy divergences and voting results:

The decision passed with 9 votes in favor and 3 against, the most dissenting votes in six years. Among the dissenters, two officials (Kansas City Fed President Esther George and Chicago Fed President Austan Goolsbee) advocated for keeping rates unchanged, while another official (Fed Governor Michelle Bowman) supported a 50 basis point cut.

Key statements in the policy declaration:

Future rate cuts will depend on changes in the economic outlook, emphasizing that 'deterioration in the labor market' is a threshold for further rate cuts.

Powell clearly ruled out the possibility of rate hikes but stated that they will enter a 'wait-and-see period', with future actions needing to be evaluated based on data.

II. Market reactions and asset performances

U.S. stocks and precious metals:

All three major U.S. stock indices closed higher, with the Dow up 1.05%, the S&P 500 up 0.68%, and the Nasdaq up 0.33%. Tech stocks and bank stocks led the gains, with storage chip companies Western Digital and Micron Technology hitting all-time highs.

Gold and silver jumped sharply in the short term, but gains narrowed due to hawkish policy statements.

Exchange rates and capital flows:

The U.S. dollar index fell, with the RMB to USD exchange rate rising to around 7.07 (appreciating 3.8% year-to-date), as the market expects capital may flow to emerging markets, alleviating the pressure on the China-U.S. interest rate differential.

III. Future policy path and controversies

Dot plot guidance leans hawkish:

The latest Fed forecast (dot plot) shows only one rate cut in 2026 (25 basis points), another in 2027, ultimately returning the rate to a long-term level of 3%. This diverges from the market's previous expectation of two rate cuts.

Economic data dilemma:

Due to the U.S. government shutdown, key employment and inflation data from September to November are missing, putting the Fed in a state of 'information blind flying' for decision-making, intensifying internal disagreements over inflation stickiness (core PCE around 2.9%) and weak employment (unemployment rate rising to 4.4%).

Political intervention risks:

Trump criticized the rate cut as 'too small', advocating for a 50 basis point cut, and plans to replace the Fed chair in 2026. White House economic advisor Miland has repeatedly called for more aggressive easing, raising concerns about policy independence.

Concerns

IV. Impact on the world and China

Opportunities in emerging markets:

A weaker U.S. dollar may drive capital inflows to China and other emerging markets, expanding the domestic monetary policy space.

Favorable for A-shares growth sectors (semiconductors, AI computing power) and interest rate-sensitive sectors (brokerage, real estate).

Potential risk warnings:

The Fed's balance sheet expansion (announcing the purchase of $40 billion in short-term government bonds) alongside rate cuts may exacerbate global asset bubbles.

If U.S. inflation rebounds or employment data improves beyond expectations, the rate cut path may change, warranting caution against market volatility caused by 'expectation differences'.#美联储降息 #美联储FOMC会议 #美联储FOMC会议