Download App

[Federal Reserve Decision Preview: The "Open Cards" of the Interest Rate Decision and the "Undercurrents" of the 2025 Rate Cut Path] ⑴ The market is closely watching the Fed's upcoming interest rate decision. Beyond the widely expected 25 basis point rate cut, dissenting opinions from three or more officials will be a focus. Some analysts suggest this may not only reflect deep disagreements on policy but also be linked to political factors. ⑵ The highly anticipated 2025 rate cut dot plot will reveal FOMC members' views on the number of rate cuts remaining this year: just one or possibly two. Previous signals suggest a growing preference for more rate cuts, potentially tied to specific political agendas. ⑶ The market appears to be overly optimistic about rate cuts, pricing in three rate cuts rather than two. Even if the dot plot indicates only two rate cuts, this could trigger "sell-the-fact" trading. The benchmark 10-year Treasury yield finds support below 4%, near 3.97%, while 4.09% presents resistance. ⑷ Media reports indicate that the disagreements within the Federal Reserve will force the chairman to face an unprecedented situation. If more officials appointed by Trump tend to favor larger-scale rate cuts, those officials who are cautious about rate cuts may adopt more conservative statements in future policy guidance. On the contrary, if officials who previously supported rate cuts support the current decision this time, they may gain more say in signaling the path of future rate cuts. ⑸ Taking into account recent economic data, the negative reassessment of labor market conditions and the tendency of some officials to cut interest rates faster, it is indicated that the path of rate cuts in 2025 will be full of uncertainty. In addition, although mortgage rates have fallen, they are still high for many builders, who are struggling to cope with weak demand and competition in the second-hand housing market.