On December 10, 2025, the Federal Reserve cut interest rates by 25 basis points as expected, bringing the rate range down to 3.50%-3.75%! This is the third cut in a row since September, totaling 75 basis points. However, the dot plot shows: only one cut is expected in 2026, and the pace of easing is clearly slowing. Why the cut? A tug-of-war over dual goals as employment is urgent: new job creation is slowing, and the unemployment rate has risen to 4.4%, with companies' willingness to hire cooling. Inflation remains stubborn: PCE is expected to be 2.9% this year and 2.4% next year, still exceeding the 2% target. Tariffs are pushing up price pressure.
Powell: Interest rate cuts stimulate investment and consumption, stabilize employment; but will not exacerbate inflation. Internal divisions are unprecedented: 9 members support a 25bp cut, 2 want to maintain, and 1 calls for a 50bp cut! The committee's outlook is severely divided. The market instantly went wild! The three major U.S. stock indices rose collectively, with the Dow soaring over 1%! Gold and silver surged, with silver's cumulative increase exceeding 100% this year! The dollar index fell below 99, and the decline accelerated. Trump is angry again: 'It's too little!' Powell insists on independence: data speaks, no politics involved. Impact on China: very favorable! The renminbi appreciates (midpoint rate 7.0686), studying abroad/travel costs drop significantly, saving tens of thousands a year! Import companies have lower costs and thicker profits; exports are slightly pressured. The interest burden on dollar debt companies is reduced, and foreign capital may accelerate inflow into A-shares/bond market.
The stability of the Chinese economy is the biggest attraction! Outlook: Interest rate cuts will slow down in 2026, data will determine the outcome as employment worsens, or easing may restart; if inflation rebounds, it will be paused. Actions in January are still undecided, next week's employment data + earnings season are key! Do you think this interest rate cut is timely or a hidden danger? Friends in the crypto circle, will the interest rate cut benefit cryptocurrency? Let's talk in the comments, where is the next big opportunity?
