FOMC Eve Interpretation

The recent interest rate cut of 25 basis points has basically been priced in by the market. If the cut exceeds expectations, the market may see a significant increase, but this scenario is unlikely. If the cut is only 25 basis points, the market focus will shift to changes in the wording of the policy statement—any strong wording similar to the previous "employment prioritized over inflation" could trigger immediate volatility.

In addition, two aspects of information should be emphasized: first, the forecast of officials on the future interest rate cut path as shown in the dot plot; second, whether the statement mentions asset purchase plans such as increasing holdings of MBS or short-term government bonds (quasi-QE direction), as these liquidity signals will provide clear benefits to risk assets.