Economic Forecast - GDP growth forecasts for Q4 2025 to Q4 2028 have been revised up by 0.1pct, 0.5pct, 0.1pct, and 0.1pct to 1.7%, 2.3%, 2.0%, and 1.9% respectively[2] - The unemployment rate for 2027 has been lowered by 0.1pct to 4.2%[2] - PCE inflation forecasts for Q4 2025 and Q4 2026 have been reduced by 0.1pct and 0.2pct to 2.9% and 2.4% respectively[2] FOMC Meeting Insights - The December FOMC meeting resulted in a 25bps rate cut, with a 9-3 vote, indicating a slight hawkish stance[4] - Six FOMC members opposed the rate cut, reflecting a more hawkish sentiment overall[4] - The Fed announced a "light expansion" of its balance sheet, purchasing $40 billion in short-term Treasury bills monthly[4] Market Reactions - Powell's dovish comments during the press conference led to a rise in gold, U.S. stocks, and commodities, while U.S. Treasury yields and the dollar index fell[3] - The market is pricing in a 22% chance of a rate cut by January, 78% by April, and 221% by December 2026[5] Risks and Considerations - Risks include a faster-than-expected decline in U.S. employment and prolonged high interest rates potentially leading to liquidity crises[5] - Inflation risks are seen as significantly weakened, while GDP downside risks have eased[2]