By Chloe, ChainCatcher

At 2:00 AM on September 18th, the U.S. Federal Reserve (Fed) announced a 25 basis point interest rate cut, lowering the range from 4.25% to 4.50% to 4.00% to 4.25%. After five consecutive meetings this year where rates remained unchanged, this was the first rate cut by the Fed since December of last year, and is expected to usher in a new round of rate cuts.

ChainCatcher simply summarizes the key points of the FOMC interest rate decision meeting, Powell's speech, the outlook for the US economy, and feedback from major institutions and analysts.

More than 70% of officials prefer to cut interest rates 1 to 3 times by 2025.

The Federal Open Market Committee voted 11-1 to cut the benchmark interest rate by one basis point. New Fed Governor Stephen Miran, appointed by President Trump and officially sworn in on the 16th after a rapid Senate vote, was the lone vote against the decision. Miran argued for a more aggressive rate cut, a 50 basis point reduction at once, rather than the 25 basis points ultimately adopted. His call for more aggressive easing is reflected in the single lower projection in the dot plot, indicating support for a cumulative rate cut of 150 basis points by year-end.

Forecasts indicate the Fed is expected to cut interest rates by another 75 basis points in 2025, highlighting its growing concerns about the balance of risks. While the Federal Open Market Committee emphasized its commitment to its 2% inflation target, its tone was more supportive of growth and employment amidst slowing economic momentum.

After collating data from 19 officials who participated in the FOMC meeting, the majority (76.3%) preferred to cut interest rates one to three times by 2025. About half (47.4%) of them supported a 75 basis point cut, or three times, while another 31.6% supported a 25 basis point cut. A minority (5.3%) believed that there would be no more interest rate cuts this year or even supported a substantial 150 basis point cut. This shows that in the context of the economy still showing signs of slowing down and inflationary pressure gradually easing, Federal Reserve officials generally tend to maintain loose monetary policy and expect that there may still be multiple interest rate cuts before the end of the year to stimulate economic growth.

The market currently believes that the central bank is preparing the market for a more accommodative policy path, with the future path being completely dovish. However, Bitcoin's reaction has been slow, with price consolidation dominating the overall directional momentum.

Powell said after the meeting that he continues to be concerned about inflationary pressures from tariffs. "Our obligation is to ensure that one-time price increases do not become a persistent inflationary problem." Powell also said, "Labor demand has weakened, and the recent pace of job creation appears to be below the break-even level needed to keep the unemployment rate unchanged."

When asked whether there would be opportunities for further rate hikes before the end of the year, Powell was cautious, saying the Fed is currently in a "meeting-by-meeting adjustment situation."

Institutional Observation

Seema Shah, global chief strategist at Principal Asset Management, said: "The dot plot presents a wide range of views, accurately reflecting the complex economic landscape created by changes in the labor supply, concerns about data accuracy, and uncertainty about government policies."

A CME Group market trader said: "The FedWatch tool uses the price of 30-day federal funds futures contracts to calculate the market-implied probability of interest rate changes, and estimates that there will be two to three more rate cuts next year."

Seema Shah, chief global strategist at Principal Asset ManagementSM, said: "Next year's dot plot is a mix of views and accurately reflects the complexity of the current economic outlook, including changes in the labor supply, data measurement issues, and government policy volatility and uncertainty, which all add to the confusion."

Dovish/Hawkish Analysts' Views

Dovish views

Michael Gapen (Chief U.S. Economist at Morgan Stanley): "The Fed cut rates by 25 basis points, as expected, and hinted at more cuts to come. The Fed now believes that downside risks to employment have increased, which justifies today's 25 basis point cut and a 75 basis point cut by year-end. The updated forecasts show that inflation is likely to stay above 2.0% for a longer period, with PCE inflation raised from 2.4% to 2.6%. Overall, this is a dovish signal."

Blair Shwedo (Bank of America): "The Fed's decision was not surprising, with risk assets and US Treasuries seemingly focused on expectations of two more rate cuts this year. The decision from this meeting should be positive for risk assets overall, and we should see credit spreads remain at historically tight levels."

Brian Jacobsen (Chief Economist at Annex Wealth Management) said: "The Fed decision was in line with our expectations, while Milan voted in dissent to call for a larger (50 basis points) rate cut."

Hawkish views

Michael Rosen (Chief Investment Officer of Angeles Investments) said: "In this decision, the Fed not only lowered interest rates but also raised its forecast for future inflation. This reflects the Fed's desire to stimulate economic activity and increase job opportunities through rate cuts, given the recent slowdown in job growth and a slight increase in the unemployment rate. Furthermore, inflation remains above the Fed's 2% target. Raising the inflation forecast suggests the Fed believes price pressures may be more persistent than previously assumed. This forces the Fed to carefully balance rate cuts with inflationary pressures, avoiding both excessive easing that exacerbates price increases and excessive tightening that further deteriorates the job market."

Christopher Hodge (Natixis Chief U.S. Economist): "Powell needs to explain why the dot plot suggests more rate cuts in 2026, even with lower unemployment and higher inflation. The dot plot is a difficult-to-interpret patchwork of projections, and the dovish dots appear to conflict with projected inflation/labor market dynamics."

Finally, several analysts noted significant disagreements among Fed officials. Brij Khurana (Wellington Management) noted, "Only Milan dissented, pushing for a 50 basis point rate cut. The market had speculated that both Waller and Bowman would push for a 50 basis point cut at this meeting."

Although most officials predicted in the latest dot plot that there is still room for two rate cuts this year, pushing the benchmark rate to 3.5%-3.75%, the market is in a tug-of-war between wait-and-see and disagreement. Mark Malek of Siebert Financial remains cautious about overly optimistic prospects, believing that premature enthusiasm could lead to a more severe sell-off in stocks and bonds, while Peter Cardillo of Spartan Capital views this decision as a dovish signal and expects yields and stocks to continue to rise.

Federal Reserve's Collins still believes there are reasons to be cautious about a December rate cut.

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