Core Viewpoint - The Federal Reserve is gradually opening the door to interest rate cuts, with a new monetary policy framework that emphasizes flexible inflation targeting and acknowledges the challenges in measuring full employment [2][4]. Group 1: Federal Reserve's New Framework - The new framework indicates a shift away from fixed employment targets, recognizing that full employment is not directly measurable and varies over time [2]. - The Federal Reserve's adjustment is partly a response to recent revisions in employment data by the Bureau of Labor Statistics, which has raised questions about the credibility of employment statistics [2][3]. - The framework retains the complementary assumption between employment and inflation targets, allowing for some discretionary power in policy decisions [4]. Group 2: Impact of Digital Technology - Digital technology is changing the transmission mechanisms of monetary policy, complicating the speed and boundaries of policy effects [3]. - The emergence of decentralized stablecoins is altering the medium and ecosystem of currency transmission, increasing the costs for the Federal Reserve to track and analyze monetary flows [3]. Group 3: Global Market Implications - The non-typical interest rate cuts by the Federal Reserve may have different impacts on global financial markets due to the evolving global economic structure [4][5]. - The effects of rate cuts will not be uniform across global markets but will depend on the correlation of countries' economic relationships with the U.S. and their acceptance of dollar-based stablecoins [5]. - Countries need to adapt their risk management strategies in response to the changes brought about by the Federal Reserve's policy adjustments and the influence of new technologies [5].

Core Viewpoint - The Federal Reserve is opening the door to interest rate cuts as it adjusts its monetary policy framework, emphasizing the need for flexibility in achieving full employment and price stability [1][2]. Group 1: Federal Reserve's New Monetary Policy Framework - The new framework redefines the goals of full employment and price stability, indicating that fixed employment targets are unsuitable due to their variability over time [1]. - The Federal Reserve has shifted away from a "compensatory" inflation strategy, signaling that upcoming rate cuts are preventive rather than aggressive [1][3]. - The adjustment in the monetary policy framework is partly a response to recent significant revisions in employment data by the U.S. Bureau of Labor Statistics, raising concerns about the reliability of employment statistics [1][2]. Group 2: Challenges and Implications - The current environment presents uncertainties regarding the stability and predictability of decision-making, influenced by potential data distortions in employment and price indices [2]. - Digital technology is transforming the transmission mechanisms of monetary policy, complicating the Fed's ability to adapt its framework to these changes [2][3]. - The emergence of decentralized stablecoins is shifting some monetary policy functions from the Federal Reserve to the U.S. Treasury, challenging the Fed's control over macro-financial dynamics [2][3]. Group 3: Global Market Impact - The impact of the Fed's interest rate cuts on global markets will not be uniform but will depend on the economic relationships between countries and their acceptance of dollar-based stablecoins [4]. - Countries need to adjust their risk management strategies in response to the evolving global market dynamics influenced by the Fed's policy changes [4][5]. - The Fed's policy adjustments prompt other central banks to reconsider their traditional frameworks and adapt to new technological and transmission mechanisms [5].

Core Viewpoint - The adjustment of the Federal Reserve's monetary policy framework not only opens the door for interest rate cuts but also prompts central banks worldwide to reflect on traditional policy frameworks in light of new technologies and transmission mechanisms [1][6]. Group 1: Federal Reserve's New Framework - The Federal Reserve's new monetary policy framework emphasizes that full employment cannot be directly measured and is subject to change over time, making fixed employment targets unsuitable [2]. - The new framework signals a shift back to a flexible inflation targeting regime, moving away from the previous "compensatory" inflation strategy, indicating that the upcoming rate cuts are preventive rather than aggressive [2][4]. - The adjustment is partly a response to unprecedented revisions in employment data by the U.S. Bureau of Labor Statistics, raising questions about the credibility of employment data and undermining the authority of the Federal Reserve's decisions [2][3]. Group 2: Challenges and Changes in Monetary Policy - The current environment presents complexities for the Federal Reserve, particularly regarding the stability and predictability of decision-making based on potentially distorted employment and price index statistics [3]. - Digital technology is transforming the transmission mechanisms of monetary policy, complicating the speed and boundaries of policy effectiveness, necessitating adjustments to the Federal Reserve's adaptive support framework [3]. - The emergence of decentralized stablecoins is shifting some monetary policy functions from the Federal Reserve to the U.S. Treasury, challenging the traditional belief in the independence of central bank monetary policy [3][4]. Group 3: Global Implications of Rate Cuts - The Federal Reserve's non-typical rate cuts may have different impacts on global financial markets due to the ongoing restructuring of the global economic system [4]. - The effects of the Federal Reserve's rate cuts on global markets will not be uniform but will depend on the correlation of trade relationships with the U.S. and the acceptance of dollar-based stablecoins [5]. - Countries, including China, need to update their cross-border liquidity stress testing models and better understand the impacts of stablecoins on national currencies and financial systems [5].