Feng Huang Wang·2025-09-18 12:13Core Viewpoint - The Federal Reserve's decision to cut interest rates by 25 basis points marks the beginning of a new preventive rate-cutting cycle, with expectations for further cuts in October and December [1][2][3]. Summary by Relevant Categories Interest Rate Outlook - Most brokerages anticipate an additional 50 basis points of cuts within the year, with a general consensus on two more cuts expected [1][3][9]. - The Fed's internal decision-making shows significant divergence, leading to uncertainty in future rate paths [1][4][11]. Economic Projections - The prevailing view is a soft landing for the U.S. economy, although some firms warn that excessive monetary easing could lead to stagflation risks [1][4][7][11]. - Analysts express mixed views on the economic outlook, with some highlighting the potential for continued support for U.S. equities and bonds [3][9][10]. Market Reactions - Following the rate cut, there is an expectation of increased volatility in risk assets, with a short-term positive outlook for U.S. stocks [3][6][12]. - The market had largely priced in the rate cut, leading to initial gains in bonds and equities, followed by corrections [6][12]. Sector Impacts - The real estate and manufacturing sectors are expected to benefit first from the rate cuts, while the overall sentiment in the A-share market remains positive [7][8][9]. - The potential for increased foreign capital inflow into Hong Kong stocks is noted, particularly if synchronized easing occurs between the U.S. and China [5][8]. Divergence in Analyst Opinions - Analysts from different firms express varying views on the Fed's future actions, with some suggesting a more hawkish stance despite the rate cuts [2][4][13]. - The Fed's communication strategy is seen as a balancing act between addressing employment risks and managing inflation expectations [11][14].