At 2:00 AM Beijing time on September 19, 2024, the Fed cut rates by 50 basis points, from 5.00-5.25% to 4.50-4.75%, officially kicking off the easing cycle.
Policy Divergence
Job growth was described as "slowed" versus previously "moderated."
Employment and Inflation Risks Now "Roughly in Balance"
The Committee Again Emphasized Inflation and Two-Sided Risks, Supporting Maximum Employment
Governor Bowman dissented, voting for 25bp instead of 50bp.
Rate Cut Expectations
The dot plot shows nine officials favor less than 100bp of cuts in 2024, while ten favor more than 100bp – the split remains.
For 2025, Most Officials See Rates Falling to Around 3.4%, a 100bp Decline
Unemployment & Inflation
Unemployment is expected to rise to 4.4% by year-end and stay there through 2025, then fall back to 4.2%-4.3% in 2026.
PCE is seen falling to 2.3%.
Core PCE to Around 2.6%
The Three Major Indexes Opened Nearly Flat, Spiked Just Before the Decision, Then Pulled Back
This Friday also brings the Bank of Japan's rate decision, second in importance only to the FOMC meeting. Investors should watch the BOJ decision and Governor Ueda's comments.
The Fed released three documents: Powell's press conference remarks, the FOMC statement, and the Summary of Economic Projections.
Risk disclaimer: This content is for reference only and does not represent any investment advice. Markets are risky; invest with caution.
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