The Fed cut interest rates by 25 basis points, and Powell stated that it is a risk management measure.

According to news from Hashchain, the Fed announced a reduction of the federal funds rate by 25 basis points, lowering it from 4.25%-4.50% to 4.00%-4.25%, in line with market expectations. Following the announcement, the market reacted strongly, with the three major U.S. stock indices rapidly rising before quickly plummeting, and the U.S. dollar index briefly hitting a new low since 2025, before sharply rebounding, turning from a decline to an increase. This market volatility is closely related to the subsequent monetary policy press conference by Fed Chair Powell. He stated that a 50 basis point cut did not receive widespread support and that there is no need for a rapid adjustment of interest rates, viewing this move as a risk management-style rate cut, which means that the Fed will not enter a protracted rate-cutting cycle. Powell reiterated that the Fed is firmly committed to maintaining its independence. Currently, there is no indication that market participants are factoring the risks to the Fed's independence into their considerations. The latest dot plot indicated that the median expectation of Fed officials is for two more rate cuts (each by 25 basis points) within this year, which is one more than the prediction made in June. Additionally, Fed officials expect to cut rates three times this year, with further cuts of 25 basis points each in 2026 and 2027.

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