Group 1 - The Federal Open Market Committee (FOMC) decided to pause interest rate cuts, maintaining the federal funds target rate at 3.5%-3.75%, which aligns with market expectations. Out of 12 FOMC voting members, 2 opposed the decision, with members Milan and Waller advocating for a 25 basis point cut [1][12][28] - The FOMC's statement reflects a marginally optimistic shift regarding the economy and employment, changing the description of economic growth from "moderate expansion" to "solid expansion." Although job growth remains low, the unemployment rate has shown signs of stabilization [1][12][28] - In the press conference, Powell indicated that the risks of inflation rising and employment declining have diminished, and future decisions are not predetermined, with no assumption of rate hikes being made [1][12][28] Group 2 - The focus for potential interest rate cuts this year is on the trend of employment recovery rather than inflation constraints. Non-economic factors, particularly potential fiscal stimulus under election pressure, are also significant [2][18][22] - The employment market has weakened since 2025, influenced by factors such as immigration restrictions, government layoffs, and structural impacts from AI. A central point for non-farm employment growth is set at 100,000 jobs per month, which could determine the Fed's decision on rate cuts [3][19][23] - Inflation should not be viewed as a precondition for rate cuts but rather as a feedback mechanism from the economy. Current inflation risks are considered weak, with expectations that tariff impacts have peaked and core commodity inflation is unlikely to rise significantly [3][19][23] Group 3 - The potential for personnel changes within the Federal Reserve is unlikely to shift the current neutral stance towards an unexpectedly dovish rate cut. Current candidates for the chair position, including Riedel, Walsh, and Waller, support Fed independence and do not favor aggressive rate cuts [4][20][24] - The midterm election pressure may lead to additional fiscal stimulus, which could create upward risks for the economy and inflation. Key issues driving voter concerns include K-shaped economic recovery and the cost of living crisis [5][25][30] - The market reaction has been muted, with expectations for two rate cuts remaining stable, although the probability for a June cut has slightly decreased. The futures market indicates a slight increase in the expected number of rate cuts this year [16][32]

Core Viewpoint - The Federal Open Market Committee (FOMC) has decided to pause interest rate cuts, maintaining the federal funds target rate at 3.5%-3.75%, which aligns with market expectations [2][15]. Economic Factors - The focus for this year's interest rate cuts is on the employment recovery trend rather than inflation constraints. The employment growth threshold is set at 100,000 jobs per month, which could determine the Fed's future actions regarding rate cuts [4][10]. - The employment market has shown signs of weakness since 2025, influenced by factors such as immigration restrictions, government layoffs, and structural impacts from AI. The Fed may pause rate cuts if job growth stabilizes around 100,000 per month [4][10]. - Inflation should not be viewed as a precondition for rate cuts but rather as a feedback mechanism from the economy. Current inflation risks are considered weak, with core goods inflation unlikely to rise significantly [4][10]. Non-Economic Factors - The potential for fiscal stimulus under election pressure is a key non-economic factor that could affect rate cut expectations later in the year. This is more significant than changes in Fed personnel [11][12]. - The upcoming midterm elections are expected to drive fiscal policies, with Trump potentially introducing additional fiscal measures to gain voter support if current non-spending measures fail [12]. FOMC Meeting Insights - The FOMC's recent meeting reflected a more optimistic tone regarding economic growth, shifting from "moderate expansion" to "solid expansion." The unemployment rate is showing signs of stabilization, although job growth remains low [15][16]. - Powell emphasized the importance of Fed independence during the press conference, avoiding questions about personnel changes and market volatility [16][17]. Market Reactions - The market anticipates two rate cuts this year, with a slight decrease in the probability of a June rate cut from 82.7% to 75.1%. Asset performance has been moderate as the market awaits earnings reports from major companies [20].