Coming Soon: The Federal Reserve's Major Decision Tonight: Hawkish Rate Cut Approaches, Unprecedented Internal Divisions! The Global Financial Market is on High Alert for an Eruption!
At 3 AM Beijing time on Thursday, the global market holds its breath—The Federal Reserve is about to announce its latest interest rate decision. The market has generally bet on a third consecutive rate cut of 25 basis points, bringing the rate down to 3.5%-3.75%.
But this is by no means a simple rate cut.
The Federal Reserve is currently experiencing a "serious division": one side is concerned about the deterioration of the job market and calls for continued rate cuts; the other side warns of inflation risks, believing that easing has reached its limits.
Thus, a key concept has emerged—"hawkish rate cut."
That is: cutting rates while clearly implying "this may be the last time in the near future."
Focus 1: What does Powell say?
The post-meeting statement and Powell's press conference will be key to interpreting future policy directions. Goldman Sachs expects the statement to revert to cautious wording like "further adjustments in magnitude and timing," indicating that the threshold for another rate cut has significantly increased.
Focus 2: Dot Plot and Internal Voting
The "dot plot," reflecting officials' interest rate forecasts, will be updated again. Notably, this voting may see multiple dissenting votes:
· Kansas City Fed President George (who opposed the rate cut last month) is expected to vote against again;
· More than one-third of economists believe St. Louis Fed President Bullard will also oppose, citing inflation concerns;
· Board member Mester may call for a 50 basis point cut, continuing the "dovish dissent" from the previous two meetings.
Focus 3: Economic Data and Inflation Dilemma
Although the core PCE inflation slightly decreased to 2.8% in September, it remains significantly above the 2% target. Meanwhile, the job market has begun to show signs of fatigue: hiring decreased in October, and layoffs increased.
Focus 4: Could the Balance Sheet Shift?
In addition to interest rates, the Federal Reserve may also send another signal: restarting bond purchases (though not at a scale that could be termed "quantitative easing"). In October, they just announced the halt of "balance sheet reduction," and now due to market funding pressure, the purchasing plan may restart.
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