Group 1 - The Federal Open Market Committee (FOMC) announced a 25 basis point reduction in the federal funds rate target range to 3.50%–3.75%, marking a shift from an "anti-inflation priority" to "preventive support for employment" [1] - The median forecast for real GDP growth in 2025 was significantly downgraded from 2.3% to 1.7%, the largest single revision in this cycle, while the unemployment rate forecast was raised from 4.4% to 4.5% [1] - The long-term median forecast for the federal funds rate remains stable at 3.0%, indicating acceptance of a "higher neutral rate" as the new normal [1] Group 2 - The FOMC's decision reflects internal divisions, with nine members supporting a 25 basis point cut, while others advocated for a more aggressive 50 basis point reduction or maintaining the current rate [2] - The FOMC announced plans to purchase short-term government bonds to maintain sufficient reserves, signaling a substantial exit from quantitative tightening (QT) [2] - The adjustment by the Federal Reserve may reshape cross-border capital flows and financing costs in emerging markets, although the emphasis on "data dependence" suggests caution against interpreting this as the start of a new easing cycle [2]

Group 1 - The Federal Reserve decided to maintain the federal funds rate in the range of 4.25%-4.50%, marking the fifth consecutive pause since December 2024, aligning with market expectations [2] - The Fed's statement highlighted robust economic activity and low unemployment, but noted that inflation remains slightly elevated, indicating caution regarding external risks and tariff policy impacts [2] - The latest dot plot revealed significant internal divergence on the interest rate path for 2025, with 7 officials believing no rate cuts are necessary, while 10 support two rate cuts, reflecting a more conservative stance compared to March [3] Group 2 - The Fed revised its economic outlook, lowering the 2025 GDP growth forecast from 1.7% to 1.4% and raising core PCE inflation expectations from 2.8% to 3.1%, alongside an increase in the unemployment rate forecast from 4.4% to 4.5% [6] - The impact of tariffs on inflation expectations is reshaping the economic landscape, with the Fed anticipating core PCE inflation to rise to 3.1% in 2025, prompting a delay in rate cuts to prevent inflation expectations from becoming unanchored [7] - Fed Chair Powell emphasized a "data-dependent" approach, indicating that decisions will be based on labor market conditions, inflation data, and tariff effects, allowing for flexibility in policy responses [8] Group 3 - Geopolitical risks, such as conflicts in the Middle East and escalating global trade tensions, complicate the Fed's policy path, with current market focus on the Fed's policy trajectory and economic data rather than short-term safe-haven demand for gold [9] - Following the Fed's hawkish stance, the dollar index rose to 98.85, putting downward pressure on gold prices, which fell below the previous trading range, with a short-term bearish trend established [10] - Experts suggest that while gold may face short-term pressure due to the Fed's anti-inflation stance, it remains a core asset in a long-term stagflation environment, with potential for recovery if inflation data falls below 2.8% [12]

Core Viewpoint - The conflict between Trump's aggressive trade policies and the Federal Reserve's monetary policy is intensifying, with Trump criticizing Fed Chair Powell for not lowering interest rates to stimulate the economy amid rising tariffs and supply chain disruptions [1][3][11]. Group 1: Trump's Actions and Criticism - Trump has previously criticized Powell's interest rate hikes, claiming they stifle economic growth, and has hinted at wanting Powell to resign [3]. - Trump attempted to use public opinion and legal avenues to remove Powell, threatening to fire him and exploring the possibility of doing so under "just cause" [3][6]. - Following warnings from Treasury Secretary Mnuchin and Commerce Secretary Ross about potential market turmoil from Powell's dismissal, Trump stated he had "never intended" to remove Powell but continued to criticize the Fed's policies [4][11]. Group 2: Federal Reserve's Response - The Federal Reserve, under Powell's leadership, has maintained its independence, emphasizing that monetary policy should not be influenced by political pressures [3][8]. - The Fed's internal unity is strong, with officials collectively defending their independence and emphasizing the need to combat inflation [7][8]. - The release of the Fed's Beige Book highlighted the negative impacts of tariffs, including rising costs and supply chain issues, which Powell used to reinforce the Fed's stance against political interference [7][8]. Group 3: Market Reactions and Economic Implications - Financial markets reacted negatively to the rumors of Powell's potential dismissal, with significant sell-offs in stocks and bonds [4][7]. - The Beige Book reported widespread "cost-push inflation" across the U.S., with specific examples of industries facing severe cost increases and layoffs [7][8]. - As the 2026 elections approach, the ongoing conflict between the Fed's independence and political pressures will continue to shape economic conditions and market confidence in the U.S. financial system [11].