Big news! The Federal Reserve announced a 25 basis point interest rate cut

On the 17th local time, the U.S. Federal Reserve concluded its two-day monetary policy meeting and announced a 25 basis point cut in the target range for the federal funds rate, to 4% to 4.25%.

This decision was in line with widespread market expectations and continued the accommodative policy path the Fed has adopted since last year to address economic uncertainty.

From September to December of last year, the Fed cut interest rates by a total of 100 basis points across three meetings, attempting to inject liquidity into the economy and boost market confidence.

In the five subsequent meetings, the Fed paused its rate cuts, maintaining policy stability to observe the effects of previous policies and the evolution of economic data.

However, the latest employment data, which continued to fall short of expectations, became a key factor in the current rate cuts. The U.S. Department of Labor's recent report showed a significant slowdown in job growth and a slight increase in the unemployment rate, suggesting that the weakening of labor market momentum is more severe than many analysts had previously estimated.

This string of weak data not only reflects the increasing risk of stagnant job growth but also may indicate greater pressure on the overall economy.

Against this backdrop, the Fed's policy balance has clearly tilted toward "maximum employment." While maintaining price stability remains one of the Fed's statutory responsibilities, the current performance of the labor market compels the Fed to take more proactive, precautionary measures.

Therefore, this rate cut can be considered a classic "preventative" one, aimed at lowering financing costs, releasing market liquidity, and encouraging businesses to increase investment and hiring, thereby supporting the labor market and preventing a rapid slowdown in economic momentum.

Analysts generally believe that the Fed's move reflects growing concern about the economic outlook, particularly its vigilance against stagnant employment and the risk of a "hard landing." By making early and small interest rate adjustments, the Fed seeks to maintain economic expansion while stabilizing market expectations and reserving policy space for potential downside risks. The future path of interest rates will remain highly dependent on data, particularly the evolution of labor market and inflation indicators.