Matrixport Investment Research: The United States has entered the monetary easing policy channel, and market volatility may further increase

At 2:00 am on September 19, the Federal Reserve announced a 50 basis point interest rate cut, and the target range of the federal funds rate was reduced from 5.25%-5.50% to 4.75%-5.0%, and the US monetary policy easing cycle officially began. This rate cut is the first rate cut since March 2020. The market generally believes that the start of the rate cut cycle is good for risky assets. After the rate cut information was announced, crypto assets, gold and US stocks, led by BTC, all rose to varying degrees.

The Fed will cut interest rates by another 50 bp this year, and the market remains concerned about a recession

The Feds dot plot shows that it is expected to cut interest rates twice more this year, totaling 50 bp, four times in 2025, totaling 100 bp, and two times in 2026, totaling 50 bp, with an overall rate cut of 250 bp and an end point of 2.75-3%. The rate cut exceeded the expectations of many Wall Street investment banks. Historical data shows that the first rate cut of 50 bp only occurred in market emergencies, such as the technology bubble in January 2001, the financial crisis in September 2007, and the COVID-19 pandemic in March 2020.

Macro data expectations adjusted, the Feds confidence in curbing inflation increased

Public information shows that the Fed lowered its GDP growth forecast for this year from 2.1% to 2.0%, and significantly raised its unemployment forecast from 4.0% to 4.4%. It also lowered its PCE inflation forecast from 2.6 to 2.3%. The Feds adjustment of data expectations shows that it has increased its confidence in curbing inflation, and the labor market is also a focus of the Fed. Overall, the first large-scale interest rate cut and the more hawkish rate cut rhythm have brought an overall short-term boost to the market.

The market is polarized in its response to the Feds rate cuts. It is still unknown whether the economy will have a soft landing or will amplify inflation and geopolitical risks. However, in the short term, market volatility and uncertainty will increase, and market trends will become more complex. Investors are advised to pay close attention to leading economic indicators such as employment data to control risks.

Disclaimer: The market is risky and investment should be cautious. This article does not constitute investment advice. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.