Core Viewpoint - The article discusses the ongoing tension between the Federal Reserve and political pressures from Trump, highlighting Powell's ability to maintain the Fed's independence during the recent FOMC meeting [2][5][15]. Group 1: FOMC Meeting Insights - The focus of the September FOMC meeting was not only on the rate cut magnitude but also on the dynamics within the committee, including new member Milan's rapid inclusion and legal issues faced by member Cook [3]. - Only member Milan supported a 50 basis point cut, while other members, including Waller and Bowman, aligned with the majority [3]. - The median forecast for rate cuts in 2025 was raised from 50 basis points to 75 basis points, with only 9 out of 19 members supporting this adjustment [3]. Group 2: Economic Projections - The FOMC members have become more optimistic about the economy, raising the GDP forecast for 2025 to 1.6% from 1.4% and for 2026 to 1.8% from 1.6% [4]. - The unemployment rate forecast for 2026 was lowered to 4.4% from 4.5%, while the core PCE inflation forecast was increased to 2.6% from 2.4% [4]. Group 3: Market Reactions - The independence of the Fed has led to gold being the biggest loser from the FOMC meeting, as it had previously seen a 10% increase since the Jackson Hole meeting [5]. - Other asset classes experienced limited volatility, with the market's expectations for a series of 25 basis point cuts being met [5]. Group 4: Monetary Policy and Labor Market - Powell expressed concerns about the labor market, introducing the term "risk management cut" to describe the Fed's approach to rate cuts, which may pressure the stock market [9]. - The current labor market faces challenges from reduced immigration and weakening demand, impacting the overall economic outlook [9]. Group 5: Political Pressures - Trump's significant divergence from the Fed's economic growth expectations creates ongoing political pressure, as the Fed's forecasts do not align with Trump's desire for higher growth to alleviate debt pressures [14][15].

Core Viewpoint - The Federal Reserve's "third mission" of pursuing moderate long-term interest rates has gained attention, especially after new board member Stephen Milan's dissenting vote against a 25 basis point rate cut, advocating instead for a 50 basis point cut, indicating potential political influence from the White House [1][2][3]. Group 1: Federal Reserve's Rate Decisions - On September 17, the Federal Reserve announced a 25 basis point cut in the federal funds rate target range to 4.00% to 4.25%, marking the first rate cut of 2025 and following three cuts in 2024 [1]. - Milan's dissenting vote highlights a significant internal division within the Federal Reserve, with 11 votes in favor of the rate cut and 1 against, suggesting a strong consensus despite political pressures [2][4]. - The dot plot revealed a notable divergence in opinions among the 19 voting members regarding future rate cuts, indicating a lack of consensus on the pace of monetary easing [5]. Group 2: Economic Forecasts and Implications - The Federal Reserve slightly raised its GDP growth forecast for 2025 from 1.4% to 1.6%, while maintaining its predictions for unemployment and inflation for 2024 [5]. - For 2026, the Fed's outlook suggests higher growth, lower unemployment, and higher inflation, with the terminal rate projected to decrease to 3.4% from 3.6% [5]. - The current economic data indicates a shift in the Fed's focus towards stabilizing the labor market, with a cautious approach to future rate cuts [7][8]. Group 3: Market Reactions and Investment Opportunities - The anticipated continuation of rate cuts may lead to a revaluation of global assets, benefiting physical assets and precious metals, such as energy, metals, real estate, and gold [6]. - A weaker dollar could accelerate capital flows into emerging markets, particularly those benefiting from manufacturing shifts and resource exports [6]. - The Fed's cautious stance on rate cuts reflects a balancing act between achieving its dual mandate of maximum employment and price stability while navigating political pressures [8][9].

Group 1: FOMC Meeting Insights - The focus of the September FOMC meeting was not on the rate cut magnitude but on the independence of the Federal Reserve amid new member Milan's rapid joining and legal issues faced by member Cook[3] - Only Milan supported a 50bp rate cut, while Waller and Bowman, who previously voted against, aligned with the majority this time[3] - The labor market dynamics are worse than in June, contradicting Waller's earlier stance that tariffs should be excluded when considering inflation, which would suggest a larger rate cut[3] Group 2: Economic Projections and Market Reactions - The median forecast for a rate cut in 2025 was raised from 50bp to 75bp, with only 9 out of 19 members supporting this, indicating a precarious consensus[7] - The FOMC's economic outlook was optimistic, raising 2025 GDP growth to 1.6% and 2026 GDP to 1.8%, while lowering the 2026 unemployment rate to 4.4%[10] - Powell's performance during the meeting was deemed satisfactory in maintaining the Fed's independence, despite political pressures from Trump[5] Group 3: Risks and Market Implications - Risks include increased political uncertainty from Trump, leading to greater market volatility and faster capital flight from the dollar[6] - Global economic impacts from tariffs may lead to unexpected synchronized easing, alleviating long-term interest rate pressures[6] - The Fed's independence has resulted in gold being the biggest loser in the market, with a 10% increase in gold prices since the Jackson Hole meeting reflecting prior market expectations of reduced Fed independence[10]

Group 1 - The geopolitical tension index has reached its highest level in nearly a decade, reflecting increasing divisions on key issues such as the independence of the Federal Reserve, the transatlantic alliance, and security in Latin America [1][17] - The U.S. Senate narrowly confirmed Stephen Milan as a Federal Reserve Governor, highlighting significant partisan divides over monetary policy and economic governance [2][5] - The U.S. military has escalated its operations in Latin America, sinking three vessels linked to Venezuela, which has raised concerns about regional security and U.S.-Latin American relations [8][10][12] Group 2 - The U.S.-UK relationship is showing structural tensions, particularly regarding tariffs, trade, and security cooperation, as evidenced by protests during a recent state visit by the U.S. President [4][7] - NATO has increased troop deployments in Eastern Europe by 12% in response to ongoing tensions with Russia, indicating a heightened focus on collective defense capabilities [15][19] - The ongoing stalemate in the Russia-Ukraine conflict continues to create uncertainty in European security, with calls for dialogue to prevent escalation into a global crisis [13][19]

Group 1: UK Market and Central Bank Policy - The UK FTSE 100 and 250 indices lag behind continental European markets as investors remain cautious ahead of the Bank of England's interest rate decision [1] - The Bank of England is expected to maintain interest rates unchanged for the remainder of 2025 due to inflation levels significantly above the 2% target [1] - A combination of rising unemployment claims and falling core inflation may lead to a market perspective that the Bank of England might need to adopt a more accommodative policy in the future [1] Group 2: Australian Employment Data - Australia's employment data showed a surprising decline with a change of -5,400 jobs, significantly below the expected +21,200 [3] - This marks the third substantial miss against market expectations in the past four months, raising concerns about similarities with the U.S. labor market [3] - The Australian dollar weakened against most currencies, with market expectations for a rate cut by the Reserve Bank of Australia in November rising to 61% [3] Group 3: Federal Reserve Outlook - The recent FOMC meeting conveyed a cautious tone, with 9 out of 19 officials expecting two more rate cuts this year, while 6 believe no further easing is necessary [4] - The division within the Federal Reserve highlights differing views on the future interest rate path, with market expectations for two rate cuts increasing from 70% to 85% [4] - Fed Chair Powell emphasized the need for caution regarding rapid rate cuts, reflecting concerns about inflation despite a weakening job market [4]

Core Viewpoint - The Federal Reserve's recent decision to lower interest rates by 25 basis points marks a shift in focus from combating inflation to boosting employment, reflecting growing concerns about job market slowdowns [4][7][11]. Group 1: Federal Reserve's Decision - The Federal Reserve announced its first rate cut since December 2024, reducing rates by 25 basis points [4]. - Newly appointed board member Stephen I. Miran voted against the decision, advocating for a more aggressive 50 basis point cut, representing a significant political stance [4][16]. - The Fed's statement indicated a clear shift in policy focus, acknowledging a slowdown in job growth and rising unemployment risks [7][11]. Group 2: Economic Predictions - Barclays Research predicts a slight increase in the unemployment rate and heightened employment risks, forecasting two additional 25 basis point cuts in October and December, with further cuts in 2026 if unemployment rises unexpectedly [5][15]. - The Fed's "dot plot" suggests a median expectation of a total rate reduction of 0.5 percentage points by the end of the year, indicating a dovish shift among committee members [7][14]. Group 3: Market Reactions - Following the Fed's announcement, U.S. stock markets initially rose, but later retreated as concerns about economic fundamentals resurfaced [22][24]. - Analysts express mixed views on market reactions, with some warning of potential bubbles and others suggesting that gradual rate cuts may maintain market confidence [23][24]. Group 4: Inflation and Employment Dynamics - The Fed's inflation forecasts have been adjusted, with the core Personal Consumption Expenditures (PCE) inflation expected to remain at 2.6% in 2026, indicating a longer path to achieving the 2% target [10][11]. - Employment indicators show signs of cooling, with job vacancies decreasing and unemployment rates slightly rising, prompting the Fed's decision to lower rates [11][12][13]. Group 5: Future Outlook - The Fed's internal divisions on future rate cuts reflect a complex economic outlook, with varying predictions among officials regarding the number and magnitude of future cuts [18][19]. - The market anticipates continued pressure on the dollar and a favorable outlook for gold as a hedge against economic uncertainty [24][25].

Core Viewpoint - The article argues that Federal Reserve Chairman Jerome Powell's decision to cut interest rates, despite the absence of clear recession signals, represents a high-risk policy gamble aimed at demonstrating the Fed's independence and fulfilling its dual mandate [2][9]. Economic Context - Powell faces unprecedented political opposition and economic uncertainty as his term nears its end, making current policy decisions more complex and risky than ever before [2][3]. - The decision to lower rates is largely influenced by significant slowdowns in the labor market, with average job growth for August revised down from 150,000 to 29,000, indicating substantial underlying weakness [4]. Political Pressure - The Fed is navigating extraordinary challenges to its traditional independence while addressing issues like slowing growth and persistent inflation, complicating policy decisions [3][6]. - Powell has managed to maintain consensus within the Fed despite differing views on the economic outlook and significant political pressure [6][8]. Future Outlook - The Fed's interest rate predictions reveal potential for ongoing contentious debates, with some members believing no further rate cuts are necessary this year, while others advocate for additional cuts [8]. - Powell acknowledges the dual risks of labor market weakness and stubborn inflation, indicating that there are no risk-free paths forward [8]. Historical Context - The article outlines three potential outcomes of Powell's policy gamble, referencing historical precedents where early rate cuts either led to successful economic soft landings or contributed to prolonged inflationary pressures [11][12]. - Past instances of rate cuts in 1990, 2001, and 2007 failed to prevent recessions, highlighting the limitations of monetary policy [12].

Core Viewpoint - The article discusses the Federal Reserve's independence and the pressure it faces from political figures, particularly Trump, regarding interest rate decisions and economic growth expectations [2][18]. Group 1: FOMC Meeting Insights - The focus of the September FOMC meeting was not only on the interest rate cut magnitude but also on the dynamics within the committee, including new member Milan's rapid inclusion and the legal issues faced by member Cook [4]. - Only member Milan supported a 50 basis point rate cut, while other members, including Waller and Bowman, aligned with the majority [4]. - The median forecast for rate cuts in 2025 was raised from 50 basis points to 75 basis points, but only 9 out of 19 members supported this adjustment [4]. Group 2: Economic Predictions - The FOMC members have become more optimistic about the economy, raising the GDP forecast for 2025 to 1.6% and for 2026 to 1.8%, while lowering the unemployment rate for 2026 to 4.4% [5]. - Core PCE inflation expectations for 2026 were increased to 2.6% from 2.4% [5]. Group 3: Market Reactions - Gold emerged as the biggest loser from the FOMC meeting, despite being one of the best-performing asset classes since the Jackson Hole meeting, with a 10% increase attributed to market reactions to the Fed's perceived loss of independence [6]. - Other assets showed limited volatility, but the market's expectation for a series of 25 basis point rate cuts was met [8]. Group 4: Labor Market Concerns - Powell expressed significant concerns regarding the labor market, introducing the term "risk management cut" to describe the Fed's approach to rate cuts, which may suppress the likelihood of consecutive cuts [13]. - The labor market is facing pressures from reduced immigration and weakening labor demand, complicating the Fed's inflation outlook [13]. Group 5: Political Pressure - Trump's fundamental disagreement with the Fed's economic growth expectations creates ongoing political pressure, as he seeks more aggressive rate cuts to stimulate growth and alleviate debt pressures [17][18].

Core Viewpoint - The Federal Reserve's recent interest rate cut of 25 basis points to a target range of 4.00-4.25% reflects a preventive approach to manage risks in the economy, highlighting concerns over the labor market while maintaining a cautious stance on future economic conditions [1][4]. Economic Analysis - The current economic landscape shows a coexistence of strong economic growth and weak employment, with GDP growth forecasted to improve slightly by 0.2 percentage points compared to previous predictions, while unemployment rates are expected to rise [4]. - Powell described a "peculiar balance" in the labor market, where reduced labor supply due to immigration policies contrasts with weakened demand due to economic slowdown, contributing to the decision for the rate cut [5]. Political Influence - Political factors are increasingly impacting the Federal Reserve's independence, as evidenced by attempts from the Trump administration to influence Fed appointments, which poses a potential threat to its credibility and policy effectiveness [6]. Interest Rate Policy - There is significant divergence among Federal Reserve officials regarding future rate cuts, with the median forecast for rate cuts increasing from two to three times this year, indicating a growing split in opinions on monetary policy direction [7]. - The dot plot indicates a downward adjustment in future rate projections for 2026 and 2027, reflecting a cautious approach to economic data dependency [7]. Forward Guidance - The Federal Reserve is expected to continue its rate-cutting trajectory, with predictions of two additional 25 basis point cuts in October and December, aiming to reach a neutral rate of 3.25%-3.50% next year [8]. - The yield curve is anticipated to steepen due to market expectations of rate cuts and concerns over the Fed's independence, with potential for further steepening of 15-20 basis points [8]. Market Implications - Gold remains a favorable investment as central bank buying trends continue, and the renewed rate-cutting cycle supports its price, although investors are advised to adopt a dollar-cost averaging strategy due to high valuations [9]. - U.S. equities are expected to continue a moderate upward trend, driven by strong corporate earnings rather than valuation increases, with a balanced investment strategy recommended [9].

Report Summary 1. Investment Rating - No investment rating for the industry is provided in the report. 2. Core Viewpoints - The Fed's 25 - basis - point rate cut on September 17 was in line with market expectations, and the dot - plot signaled a dovish stance with a possible 50 - basis - point cut within the year. The Fed is moving towards a more "risk - neutral" policy direction, and this rate cut has a "preventive" characteristic. The market will correct the pricing of monetary easing, and the long - term trends of a weak US dollar and a strong gold market remain, but market liquidity may be weaker than previously expected [2][7][13]. 3. Summary by Directory 3.1 Fed FOMC Meeting Overview - **Interest Rate**: The target range of the federal funds rate was lowered from 4.25% - 4.5% to 4.00% - 4.25%, a 25 - basis - point cut [2][3]. - **Economic Situation**: Economic growth moderated in the first half of the year, employment growth slowed, the unemployment rate rose slightly but remained low, and inflation increased and was still slightly high. The statement removed the description of a "robust labor market" and judged that the downside risk to employment had increased [3]. - **Dual Goals**: The FOMC aims for full employment and price stability (long - term inflation at 2%), and the rate - cut decision was based on the shift in the risk balance [3]. - **Balance Sheet Reduction**: The Fed will continue to reduce its holdings of US Treasuries, agency debt, and agency mortgage - backed securities (MBS), and the balance - sheet reduction is proceeding as previously planned [3]. - **Voting Disagreement**: Among the 12 voting FOMC members, only new理事Milan voted against, preferring a 50 - basis - point cut. The voting result did not show a more divided situation [3]. - **Economic Forecast**: The median expectation of FOMC members is that GDP will grow 1.6% this year and 1.8% next year; the overall inflation rate will be 3.0% this year, drop to 2.6% in 2026, and reach 2.1% in 2027 [4]. - **Dot - Plot**: Among 19 FOMC members, 9 think there will be 2 more rate cuts this year, 2 think 1 more, 6 think no more cuts, 1 thinks there should be a rate hike, and 1 (likely new理事Milan) thinks 5 cuts. The median forecast of the federal funds rate in 2025 was lowered from 3.9% to 3.6%, implying 2 more cuts this year. From September 2025 to the end of 2027, a cumulative 125 - basis - point cut is expected, lower than Trump's expectation of 300 basis points [4]. 3.2 "Preventive" Rate Cut Initiated - Before the meeting, weak employment data, moderate inflation, and controllable tariff transmission led to a consensus market expectation of a rate cut. The 25 - basis - point cut was in line with expectations, and the dot - plot signaled a dovish stance. The Fed is moving towards a more "risk - neutral" policy, and this rate cut is "preventive" due to political risks. The meeting did not show an intensified internal division, and concerns about the Fed's independence have eased to some extent [7]. 3.3 Discussion on Subsequent Rate - Cut Path - Future rate - cut paths depend on employment and inflation data under the "risk - balance" framework, as well as political issues related to the Fed's independence. The US employment situation is complex, with short - term policy boosts but long - term structural problems. Data accuracy issues may increase the difficulty of predicting rate - cut paths. US inflation is expected to rise due to tariffs, peaking around the first quarter of 2026. The scope for further rate cuts within the year is limited, and in the base case, the rate - cut space in 2025 is about 50 - 75 basis points [8][10][12]. 3.4 Market Impact - Mainstream asset prices have largely priced in a 25 - or 50 - basis - point rate cut. After the rate - cut decision, market sentiment declined, with gold prices rising then falling, and US Treasury yields and the US dollar index showing a V - shaped reversal. The long - term trends of a weak US dollar and a strong gold market remain, but the market will correct the pricing of monetary easing, and market liquidity may be weaker than expected [13].