According to ChainCatcher, CICC's research report pointed out that from the perspective of interest rate resolution, the Fed has adopted a larger interest rate cut of 50 basis points, which is more radical than we expected. The monetary policy statement pointed out that recent inflation data has given decision makers more confidence in achieving the 2% inflation target. The Fed's actions show that its reaction function has completely shifted from focusing on inflation to focusing on employment.
We believe this is a signal that the Fed has a low tolerance for rising unemployment and officials do not want to take the risk of ruining the prospects of a soft landing. Based on Powell's statement, we believe that any unemployment rate above 4.4% in the future may trigger more rate cuts. This also suggests that the Fed will maintain a "dovish" stance until the data on the job market stabilizes. Looking ahead, the possibility of a soft landing in the short term will increase further as the Fed adopts more substantial rate cuts.
