Core Viewpoint - The Federal Reserve has decided to maintain the current interest rate, pausing any rate cuts, while China's Loan Prime Rate (LPR) remains unchanged for eight consecutive months, reducing the likelihood of short-term mortgage rate decreases for homebuyers [1][3]. Group 1: Impact of Federal Reserve's Decisions - The Federal Reserve's interest rate, known as the federal funds rate, serves as a benchmark for the financial market and influences global capital flows due to the dollar's status as the world currency [3]. - A pause in rate cuts by the Federal Reserve stabilizes dollar asset yields, which slows capital movement and alleviates pressure on the Renminbi exchange rate [3][5]. Group 2: China's Monetary Policy Context - China's monetary policy is primarily driven by domestic economic conditions, contrasting with the Federal Reserve's aggressive rate hikes from March 2022 to July 2023 to combat inflation [6]. - The Chinese economy is expected to grow at a GDP rate of 5% by 2025, supported by a shift in policy focus from monetary to fiscal measures, which are more direct and effective in stimulating specific sectors [6][11]. Group 3: Banking Sector Considerations - As of Q3 2025, the net interest margin for commercial banks in China is only 1.42%, indicating pressure on banks to maintain profitability while managing deposit and loan rates [7]. - Continuous reductions in loan rates have been made to support the real economy, but banks face challenges in lowering deposit rates without risking a loss of savings [7][10]. Group 4: Future Interest Rate Outlook - There is still potential for rate cuts, as indicated by the Deputy Governor of the People's Bank of China, with room for adjustments in reserve requirements and funding costs [10][11]. - However, the likelihood of comprehensive rate cuts in the short term is low, as the current mortgage rates are already at historical lows, and the market is in a transitional phase [11].

正如市场所料，美联储在连续第三次降息25个基点后，按下降息"暂停键"。 与前次美联储声明比较，本次美联储声明删除了就业风险增加的表述，指出经济形势有改善，尤其在失 业率上升方面已有企稳迹象，暗示联储决策者更谨慎，并不急于继续行动。经济活动方面，本次声明表 述为"经济活动在以稳固的速度扩张"，前次的表述为"经济活动在以温和的速度扩张"。 在利率决定发布后，美联储主席鲍威尔举行了发布会，并就美国当前经济状况及美联储下任主席等问题 接受记者提问，总体而言，他对经济前景做出了略为乐观的评估。 鲍威尔表示，过去一年关税上涨对消费价格的影响已基本传导完毕，"我们预计，关税对商品价格的影 响将达到峰值，然后开始下降，前提是没有新的重大关税上调措施出台，这也是我们预计今年将会看到 的情况。"他表示，美国今年通胀表现大致符合预期，但就任何进一步宽松政策的时间或节奏而言，美 联储还没有做出任何决定。 鲍威尔还表示，他和美联储其他官员致力于维护美联储的独立性。他还对上周出席最高法院的口头辩论 表示，此案"或许是美联储113年历史上最重要的法律案件"，"我仔细考虑后认为，如果我不出席，可能 很难解释清楚原因。" 当地时间1月28日， ...

Group 1 - The Federal Reserve maintains the federal funds rate target range at 4.25%-4.5% with no new rate adjustment announced, while signaling a significant rate cut of 150 basis points in 2026, which is expected to create approximately one million jobs without triggering inflation rebound [1][2] - The Federal Reserve's balance sheet has been steadily shrinking, with a reduction of $276.59 billion in 2025, bringing the total to $6.54 trillion, including a decrease of $192.59 billion in mortgage-backed securities and $76.16 billion in Treasury holdings [1] - There is a notable divergence between market expectations and the Federal Reserve's internal discussions regarding future rate paths, with some officials advocating for maintaining rates while the market anticipates two rate cuts in 2026 [2][3] Group 2 - The upcoming non-farm payroll data, expected to show an increase of 73,000 jobs and a slight decrease in the unemployment rate to 4.5%, is seen as a critical indicator for the timing of the rate cut cycle [2] - The Federal Reserve is currently in a "policy wait-and-see" phase, with stable rates and gradual balance sheet reduction as the short-term focus, while the 150 basis points rate cut expectation sets the medium to long-term policy direction [3] - The management strategy of the balance sheet remains contentious, with some potential leadership candidates advocating for a more aggressive reduction, raising concerns about market liquidity fluctuations [2]

Core Viewpoint - The U.S. economy is expected to show resilience and potential growth in 2026, despite uncertainties in the labor market and inflation [3][4]. Economic Outlook - New York Fed President John C. Williams anticipates fewer economic fluctuations in the upcoming year, emphasizing the balance between price stability and low unemployment [4][5]. - The Federal Open Market Committee (FOMC) recently cut the benchmark Federal Funds Rate to a target range of approximately 3.50%–3.75%, marking the third quarter-percentage-point cut of the year [6][7]. Labor Market Insights - The labor market is showing signs of cooling, with job growth described as anemic and the unemployment rate steadily increasing [11]. - Williams noted that labor demand is softening more than supply, raising concerns about the overall health of the job market [11]. Monetary Policy Considerations - The FOMC's cautious approach to monetary policy has been influenced by tariff inflation and trade policy, leading to a "wait-and-see" strategy before implementing rate cuts [12]. - The recent interest rate cuts are aimed at supporting hiring while managing inflation risks, highlighting the delicate balance policymakers must maintain [10].

Group 1 - The Federal Reserve announced a 25 basis point reduction in the federal funds rate target range to 3.50% to 3.75%, marking the third rate cut of the year and the sixth since September 2024 [1] - The decision to lower rates is influenced by the dual mandate of stabilizing prices and achieving full employment, with recent data indicating a cooling labor market and a notable decline in private sector employment [2] - The Fed's decision-making is complicated by the lack of official employment and inflation data due to the recent government shutdown, leading to reliance on unofficial data and increasing the risk of misjudgment [2] Group 2 - There are internal divisions within the Fed, with the mainstream faction believing the current rate cut is sufficient to address employment risks while maintaining policy flexibility [2] - The more aggressive faction advocates for larger rate cuts, citing a more severe employment situation than reflected in official data, while the cautious faction worries that rapid rate cuts could prolong inflation cycles or trigger asset bubbles [2] - The effectiveness of rate cuts is subject to delays and is constrained by external factors such as global economic slowdown and geopolitical risks [2]

Core Viewpoint - The Federal Reserve's decision to lower the federal funds rate by 25 basis points reveals internal divisions among decision-makers regarding the economic outlook and monetary policy direction [1][3]. Group 1: Federal Reserve's Decision - The Federal Reserve announced a 25 basis point cut in the federal funds rate, aligning with market expectations, but highlighted growing disagreements among its members [1]. - Board member Milan advocated for a more significant cut of 50 basis points to address potential economic downturns, while Kansas Fed President Schmidt preferred to maintain current rates [1]. Group 2: Inflation and Employment - Fed Chair Powell indicated a hawkish stance, emphasizing uncertainty about future rate cuts despite the recent decision, with the September PCE inflation rate at 2.8%, above the Fed's long-term target [3][4]. - The labor market shows signs of slowing but remains resilient, with no large-scale weakness detected, leading the Fed to adopt a cautious approach to avoid premature policy easing that could raise inflation expectations [4]. Group 3: Future Rate Cut Expectations - Market expectations suggest that while the Fed has room for further monetary easing, the pace may slow significantly, potentially shifting from "action at every meeting" to "quarterly adjustments" [5]. - This change reflects the complexity of economic fundamentals and the Fed's intention to minimize excessive market volatility [5]. Group 4: Impact of Rate Cuts - The effectiveness of rate cuts in stimulating the economy may be limited, particularly in real estate and interest-sensitive consumer sectors, due to a weakened refinancing effect [7]. - Relying solely on interest rate tools may not achieve the desired economic boost, indicating that structural policy measures may become crucial in the future [7]. Group 5: Quantitative Tightening - The Fed plans to officially end its quantitative tightening (QT) policy on December 1, ceasing the monthly reduction of $50 billion in Treasury securities and continuing to reinvest in maturing MBS and short-term Treasury bills [8]. - This decision aims to alleviate market concerns about liquidity and marks a transition towards the normalization of monetary policy, providing more flexibility for future policy adjustments [8].

Core Viewpoint - A proposal by Dallas Fed President Lorie Logan to shift the Federal Reserve's interest rate target from the federal funds rate to the tri-party general collateral rate (TGCR) is gaining attention but faces challenges as the Fed's balance sheet reduction nears completion and leadership changes are expected next year [1][2]. Group 1 - Logan's proposal suggests that the TGCR, which reflects short-term loans collateralized by bonds, is a more accurate indicator of money market conditions impacting the broader economy compared to the federal funds rate [4]. - The TGCR market sees over $1 trillion in daily volumes, significantly higher than the $100 billion in daily fed funds trading, indicating a shift in market dynamics [3]. - The Fed has been reducing liquidity for three years, and as this process continues, short-term borrowing rates may become more volatile, making the timing for a change favorable [5]. Group 2 - Influential figures in monetary policy, including former Fed staffer Ellen Meade and former New York Fed head William Dudley, have expressed support for Logan's proposal, noting its technical nature and potential merits [6]. - Despite Logan's influence, the extent of support for her idea within the Fed remains uncertain, highlighting potential headwinds to implementing the change [6].

Core Viewpoint - The Federal Open Market Committee (FOMC) is set to meet again to assess the economy and make decisions on the federal funds rate, with expectations of further rate cuts before the end of 2025 [1][5]. Group 1: FOMC Meetings and Decisions - The FOMC holds eight scheduled meetings annually, with the next meeting planned for late October 2025 [3][9]. - The most recent meeting occurred on September 16-17, 2025, where the Fed cut its benchmark rate for the first time this year [1][5]. - The FOMC's policy decisions are released at 2 p.m. Eastern time, followed by a press conference at 2:30 p.m. [5]. Group 2: Economic Indicators and Policy Assessment - Policymakers evaluate economic indicators such as the Consumer Price Index (CPI), gross domestic product (GDP), and unemployment rate to shape monetary policy [4]. - The FOMC is committed to supporting maximum employment and returning inflation to a 2% target [7]. Group 3: Future Expectations - Experts anticipate that the Fed will likely reduce the federal funds rate again in 2025, with a strong possibility of a rate cut in October [7][8]. - The current target range for the federal funds rate is set at 4% to 4.25% [10].