On December 19, the Financial Association reported (Editor: Xia Junxiong) that on Wednesday (December 18) Eastern Time, Federal Reserve Chairman Powell stated at a press conference after the interest rate meeting that the Federal Reserve is at or nearing the time to slow down rate cuts, and decisions on rate cuts next year will be based on data, making it unlikely to raise rates.

The Federal Reserve announced on Wednesday a rate cut of 25 basis points, in line with market expectations, lowering the target range for the federal funds rate to 4.25%-4.5%. This is the third consecutive rate cut by the Federal Reserve, following cuts of 50 basis points and 25 basis points in September and November respectively.

The latest dot plot shows that decision-makers expect to cut rates twice in 2025, whereas in September the forecast for the number of cuts next year reached as high as four times.

Although a rate cut was ultimately made in December, Powell claimed that this was a difficult but correct decision.

He pointed out that acting too slowly could unnecessarily weaken economic activity in the labor market, while acting too quickly could jeopardize the progress the Federal Reserve has made in controlling inflation. Therefore, the Federal Reserve is trying to find a balance between these two risks.

Discussing future monetary policy actions

Powell stated that after this rate cut action, the Federal Reserve has lowered the policy interest rate by a full 100 basis points from its peak, and the current restrictiveness of monetary policy is noticeably less strict than before, allowing decision-makers to be more cautious when considering further rate adjustments.

Regarding future monetary policy actions, Powell stated that any interest rate cuts by the Federal Reserve in 2025 will be based on upcoming data, rather than the current economic situation.

He mentioned that since the Federal Reserve is working to maintain a strong labor market while reducing the inflation rate to 2%, an interest rate hike seems unlikely next year.

Confirming the performance of the USA economy.

Powell reaffirmed the performance of the USA economy, repeatedly using terms like solid, robust, and resilient.

He stated that the overall economic performance is strong; economic growth in the second half of 2024 is expected to be faster than anticipated; there is no reason to believe the likelihood of economic downturn is higher than usual; it is clear that the USA has avoided a recession; very optimistic about the economy.

Powell noted that policymakers generally expect GDP growth to remain strong.

Discussing inflation and the labor market.

The Federal Reserve stated that, given the year-on-year inflation data still shows stickiness, it will continue to monitor the progress of inflation improvement in 2025.

When considering further interest rate cuts, attention will be paid to the improvement in inflation," Powell said. "There has been almost no significant progress in the 12-month inflation data.

Powell believes that what consumers feel more is the impact of High Prices rather than the direct effects of High Inflation.

"We are very aware that prices have risen a lot, and people really feel this, including in terms of food, transportation, and heating costs. This Global inflation outbreak has brought tremendous suffering," he said. "Although the current inflation level has decreased significantly, people still feel the pressure of High Prices, which is exactly what consumers feel the most directly."

He added that the best solution to this is for the Federal Reserve to continue working to bring the inflation rate down to target levels so that wages can keep up with inflation, ultimately restoring consumer confidence in the economy.

Powell stated that decision-makers are closely monitoring the dynamics of the labor market.

"From multiple Indicators, we indeed believe that the labor market is cooling down, but the pace of cooling is not fast, nor has it triggered real concerns," he said.

Some officials have begun to assess the potential impacts of Trump's policies.

USA President-elect Trump has threatened to implement radical tariff plans upon taking office, and economists generally believe this could lead to a resurgence of inflation in the USA.

Powell revealed that some members of the Federal Open Market Committee (FOMC) have begun to conduct preliminary assessments of the impacts of Trump's policies.

He also specifically mentioned Trump's tariff plans, stating that it is still too early to conclude how they would affect inflation.

Powell stated that the Federal Reserve has no intention of holding Bitcoin.

Trump had previously promised to implement policies favorable to the Cryptos industry upon taking office and considered establishing a Bitcoin strategic reserve.

Powell indicated that the Federal Reserve does not plan to add Bitcoin to its balance sheet.

"We cannot hold Bitcoin. The Federal Reserve Act specifies what we can own, and we have no intention of seeking to amend the law. This is a matter for Congress to consider, but we at the Federal Reserve are not seeking any changes," Powell said.