Global investors are holding their breath for the historically "most difficult to predict" Federal Reserve meeting: is it going to be a rate cut of 25 basis points or 50 basis points? However, according to Ray Dalio, the founder of the world's largest hedge fund, Bridgewater Associates, and billionaire investor, the magnitude of the "first cut" is actually not so important.

Dalio stated on Wednesday that it is appropriate for the Fed to make a small rate cut this week, with a magnitude of 25 basis points, based on the overall situation of the US economy.

"The Fed must maintain sufficiently high interest rates to convince creditors that they will receive real returns, but they cannot raise rates too high to the point where debtors encounter problems."

"Regarding whether to lower the interest rate by 25 basis points or 50 basis points, if you look at the overall picture, a 25 basis point rate cut is correct. But if you look at the situation with mortgages, where the situation is worse and affects more people, then a 50 basis point rate cut may be correct," he added.

However, overall, Dalio emphasized that in the long run, the Fed's actions this week will ultimately "have no impact" because decision-makers ultimately need to keep real interest rates low to repay the growing debt.

"The number one on Wall Street," Jamie Dimon, CEO of JPMorgan Chase, the largest bank in the United States, also believes that whether the Fed cuts interest rates by 25 basis points or 50 basis points, the impact of this move "will not be earth-shattering."

"They need to do this," Dimon said at a meeting on Tuesday, "but when the Fed raises or lowers rates, it's just a small matter because behind it is the real economy."

Historically, the most difficult to predict.

Currently, the market generally expects the Federal Reserve to cut interest rates at this meeting, but there has been disagreement about the extent of the rate cut. CME's Federal Reserve observation tool shows a 61% probability of a 50 basis point rate cut, but there is also a 39% chance of a 25 basis point rate cut. This Federal Reserve meeting can be said to be the most difficult to predict in history.

George Bory, Chief Investment Strategist for Fixed Income at investment firm Allspring, said, "It is very rare to see market disagreement 24 hours before the Federal Reserve takes action. Usually, at this point in time, the Fed communicates or guides the market's expectations for very specific actions."

Deutsche Bank analysts commented that this Federal Reserve decision is likely to be the "biggest surprise in 15 years."

Matt Weller, Director of Market Research at financial services company StoneX Group, said, "No one is completely certain... different estimates have been made, which you can call guesses if you like, but about half of them are wrong."

"So they will have to adjust their positions... in any case, we may see significant market volatility," he added.

Editor/ping