Core Points - The Federal Reserve announced a 25 basis point cut in the federal funds rate target range to 4.00% to 4.25%, marking its first rate cut of 2025 and the first reduction in nine months since December of the previous year [1] - The Fed's policy focus has shifted from controlling inflation to boosting employment, as indicated by the removal of previous statements regarding a robust labor market [2] - Fed Chairman Jerome Powell described the rate cut as a "risk management measure" to address the complex economic environment, highlighting the dual challenge of a weakening labor market and persistent inflation [3] Summary by Sections - **Interest Rate Decision** - The Federal Reserve cut the federal funds rate target range by 25 basis points to 4.00% to 4.25% [1] - This is the first rate cut of 2025 and the first in nine months since December [1] - **Policy Shift** - The Fed has changed its focus from inflation control to employment support, as evidenced by the removal of language about a strong labor market [2] - **Economic Context** - Powell noted the Fed is facing a rare dilemma with a weakening labor market necessitating easing policies while high inflation demands a tightening stance [3] - The median expectation from the "dot plot" indicates a potential further reduction of 50 basis points by the end of the year, suggesting two more 25 basis point cuts [3] - **Market Sentiment and Risks** - The market is generally optimistic about the Fed entering a new rate-cutting cycle, but there are significant risks due to global economic slowdown, high debt levels, and geopolitical conflicts [5] - The current economic environment features a structurally higher neutral interest rate, which may limit the effectiveness of monetary easing [5] - Excessive easing could lead to doubts about the Fed's commitment to controlling inflation and may risk unanchoring inflation expectations [6]