The Federal Reserve announced on November 7 that it would cut interest rates by 25 basis points, lowering the target range for the federal funds rate to 4.5% to 4.75%, which is the second rate cut after the 50 basis point cut in September. Federal Reserve Chairman Jerome Powell said in a press conference that it may be appropriate to slow the pace of interest rate cuts in the future, and emphasized that raising interest rates is not the current plan. At the same time, Powell made it clear that even if Trump asked him to resign as Fed chairman, he would not resign because “the law does not allow” the president to fire him.

On November 7, the Federal Reserve announced that it would lower the target range for the federal funds rate by 25 basis points to a level between 4.5% and 4.75%. This decision is in line with market expectations, marking the Fed's second interest rate cut in the year following the 50 basis points cut in September, realizing the “two consecutive cuts”. This is also the second rate cut since March 2020, marking the U.S. monetary policy has entered an easing cycle.

Fed officials voted unanimously to cut interest rates and said in the rate statement that the committee believes that the risks to achieving employment and inflation targets are roughly balanced, and that there is uncertainty in the economic outlook, and that the committee is concerned about the risks to achieving its dual mission. In addition, Fed Chairman Powell said in the post-meeting press conference that with the near-neutral interest rate, it may be necessary to slow the pace of interest rate cuts, and emphasized that interest rate hikes are not the Fed's plan, and that the Fed's basic expectation is that interest rates will be gradually adjusted to the neutral level.

After the release of the decision to cut interest rates, the U.S. interest rate futures market expects the Fed to cut interest rates by 25 basis points in December. At the same time, the U.S. interest rate futures pricing Fed in 2025 will cut rates another 67 basis points. Powell also said that if the economy remains strong and inflation fails to fall back to 2%, then policy can be adjusted more slowly.

On inflation, the Fed's FOMC statement made no mention of increased confidence in the sustainability of inflation toward the 2% target. The Fed's FOMC statement showed that inflation has “made progress” toward the 2% target, but remains at a relatively high level. Powell said that high inflation has eased considerably, the labor market remains robust, and continue to maintain confidence that inflation will continue to decline to 2% by adjusting its policy stance.

During the press conference, Powell was asked if he would resign as Fed chairman if Trump asked him to do so. Powell made it clear that he would not leave even if Trump asked, emphasizing that the president does not have the power to fire him because “the law doesn't allow it”. This statement also highlights the Fed's independence, even under political pressure, the Fed's policy decisions will be based on economic data and professional judgment, rather than political considerations.

After the news of the 25 basis point interest rate cut was announced, the three major U.S. stock indexes closed mixed, with the Nasdaq up 1.51%, the S&P 500 up 0.74%, and the Dow closing flat. Among them, the Nasdaq and S&P 500 indexes both continued to set new record closing highs. Large technology stocks rose across the board, with Amazon, Nvidia, and Nifty all hitting new all-time highs. Popular Chinese stocks rose, with the Nasdaq China Golden Dragon Index closing 3.5% higher.

In addition, the Fed's decision to cut interest rates also had an impact on the monetary policies of other countries and regions. The central banks of the United Kingdom, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, the Czech Republic and other countries announced interest rate cuts or reductions in repo and reverse repo rates.

The Fed's decision to cut rates and Powell's stance on the pace of future rate cuts demonstrate the Fed's delicate balance between maintaining economic growth and controlling inflation. Market participants will continue to pay close attention to the Fed's future policy moves and how they affect the global economy and financial markets.