Fed Cuts Rates by 25 Basis Points as Expected: Why the Market Shrugged? Dot Plot Reveals Internal Divisions

“Good afternoon” – when Fed Chair Jerome Powell opened his remarks at 2:30 PM on September 18, markets braced for a dovish signal. The Fed had just announced a 25-basis-point rate cut, its first since December 2024. Yet, despite the anticipated dovish tone (note: markets historically link “Good afternoon” to hawkishness and “Hello everyone” to dovishness), the market rally never materialized.

Market Reactions: Gold Hits Record, Stocks & Crypto Mixed

Post-announcement, spot gold surged to a record high of $3,704/ounce. But equities were mixed: Dow Jones rose 0.57%, while Nasdaq fell 0.33% and S&P 500 dipped 0.10%. Crypto saw modest gains: BTC +1.07% (24h), ETH +2.66%, SOL +5.5%, DOGE +6.2% – hardly the fireworks some expected.

Why the Muted Response?

Two key reasons explain the flat market:
1. “Buy the rumor, sell the fact”: Powell’s Jackson Hole speech in August already signaled a potential cut, so markets had “priced in” the move.
2. Focus on future cuts: A 25-basis-point cut wasn’t enough – the real question: *”Is this the first of many? How many more cuts in 2025?”

Dot Plot: 19 Officials, Divided on Cuts

The Fed’s Dot Plot – tracking officials’ rate projections – laid bare internal rifts. Of 19 officials:
– 1 opposed any 2025 cuts
– 6 backed 25 basis points (1 cut)
– 2 favored 50 basis points (2 cuts)
– 9 pushed for 75 basis points (3 cuts)
– 1 (likely Milan) advocated a drastic 150 basis points (at least two big cuts: 75bp + 50bp).

While “cutting rates” is now consensus (vs. June, when 7 opposed cuts), the debate is over how much. The median forecast suggests 50 more basis points in 2025 – typically bullish for stocks and crypto. But Powell cautioned: “Support for 50 basis points isn’t strong among FOMC members.”

Market Participants: Mixed Readings

Experts parsed Powell’s words differently:
– George Goncalves (Mitsubishi UFJ Macro Strategy Head): “The Fed restarted rate cuts but isn’t in ‘sprint mode.’ This was their most dovish move possible, and the Dot Plot added another cut this year. But it feels like restarting, not sprinting – they admit the job market isn’t as strong as hoped.”
– Michael Rosen (Angeles Investments CIO): “Powell cooled expectations for aggressive easing. He acknowledged labor weakness but stressed ‘larger cuts would only come if conditions worsen significantly.’”

The Fed called tariff-driven inflation “temporary,” but Powell left a caveat: if inflation proves persistent, the Fed must prevent “one-off price hikes” from becoming “sustained inflation” – keeping markets guessing.

Crypto Market: Optimism Abounds

Crypto participants struck a more upbeat tone. BitMine Chair Tom Lee told CNBC: “Post-rate cut, Bitcoin and Ethereum could surge in the next 3 months.”
On-chain data supports this: After the decision, whale 0xd8d0…c39d bought 25,000 ETH for $112.34M USDC at $4,493/ETH. Another ETH whale (with $74.92M in swing trade profits) purchased 18,000 ETH for $80.77M USDC (avg. $4,487), now holding ~$114M in ETH and USDC.

Read More《美联储如期降息25个基点，市场为何反应平淡?》

This content is AI-generated and does not constitute investment advice. Please exercise your own rational judgment.

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