Powell emphasized that the large rate cut is to stabilize the job market. The US economy is still in a strong state.

On Thursday, the Federal Reserve officially began a rate-cutting cycle, announcing a 50 basis point cut in the federal funds rate and expecting more accommodative policies to be introduced by 2024. The Federal Reserve, in its quarterly economic forecasts, stated that it anticipates further rate cuts in 2025 and 2026. Following this rate cut, Federal Reserve officials forecast a target range for the federal funds rate of 4.25% to 4.5% by the end of 2024, a decrease from the previous range of 5.25% to 5.5%. According to the Federal Reserve's dot plot forecast, the target range by the end of 2025 could further decrease to 3.25% to 3.5%. Federal Reserve Chair Jerome Powell said in a press conference that the main purpose of this rate cut is to stabilize the job market. He emphasized, "We are confident in the current monetary policy adjustment, believing that this appropriate readjustment will help maintain a strong job market, achieve moderate economic growth, and bring inflation back to a stable level of 2%." The rate cut decision by the Federal Reserve received support from the majority of officials, but Federal Reserve Governor Michelle Bowman voted against it, advocating for only a 25 basis point cut. Powell stated that while there were differing views, committee members had consensus on the rate cut issue, with all 19 members predicting multiple rate cuts by the end of the year. Powell also stressed in the press conference that the rate cut does not signify an increased expectation of an economic recession. He noted, "There are no signs of an elevated risk of recession at present. Our policy adjustment is primarily a recalibration to current economic conditions." Regarding the housing market, Powell acknowledged that housing prices remain a stubborn factor in inflation, despite prices in other areas starting to decrease. He stated that while the slowdown in rent growth will take time, in the long term, housing price inflation will gradually moderate. When asked if this rate cut would be seen as politically motivated, Powell firmly denied it. He emphasized that the Federal Reserve's decisions are not influenced by political factors, only considering the economic interests of the American people. In conclusion, Powell stated that the Federal Reserve's policy will be adjusted based on the future economic development, whether it be speeding up, slowing down, or pausing accommodative policies, all will depend on economic conditions. He noted that the future rate cut path will hinge on changes in the labor market and inflation, but currently, the U.S. economy remains strong. This rate cut marks a new stage in the Federal Reserve's balancing efforts between curbing inflation and maintaining employment. With changes in economic data, more policy adjustments will follow. Lindsay Rosner, Head of Investments for multiple departments at Goldman Sachs Asset Management, stated: "The Fed delivered what the market wanted. The market is satisfied with the Fed. The market is still ahead of the Fed, expecting another 75 basis points cut this year (Fed dot plot shows 50 basis points). Renowned economist Mohamed El-Erian commented that during the press conference, Federal Reserve Chair Powell had to navigate the contradiction between the unconventional move of starting a rate cut cycle with a 50 basis point cut and repeatedly assessing the "strong economic conditions." This has become more challenging, and it is understandable that he does not want to admit that today's 50 basis point cut is a "correction" for not cutting in July. The latest article by "Fed Whisperer" Nick Timiraos points out that the Federal Reserve is currently attempting to prevent past rate hikes from further weakening the U.S. labor market. Powell stated at the press conference, "We are intent on sustaining our economic strength. This decision reflects our growing confidence that by adjusting our policy stance appropriately, we can sustain the strong momentum in the labor market." While some Federal Reserve officials argued in recent weeks that the economy is not weak enough to warrant a 50 basis point rate cut, others concluded that the cooling of the labor market this summer justifies further rate cuts, as the Federal Reserve is essentially making up for lost time.