On Wednesday, after the Federal Reserve cut interest rates by 50 basis points, Nick Timiraos, a Wall Street Journal reporter known as the "new Federal Reserve news agency," wrote that as the Federal Reserve officially enters an easing cycle, the next question will be: where is the end point of the rate cut and how fast will it be?

Timiraos quoted Powell's remarks at the press conference in his article to answer this question.

The "end point of the rate cut" actually refers to the neutral interest rate, which is the theoretical rate that guides monetary policy. Powell stated in his speech that there is still a wide range of uncertainty in assessing the neutral interest rate, but "we will not return to the era of extremely low interest rates":

"We may not return to the era when tens of trillions of dollars of sovereign bonds were traded at negative interest rates, or when long-term bonds were traded at negative interest rates. The future neutral interest rate may be much higher than it was back then."

In terms of the speed of rate cuts, Powell stated that the Fed will not continue to cut rates at this pace and that economic data will still be the basis for decisions.

"Data will drive monetary policy choices, and rate cuts will accelerate, slow down, or pause as needed."

In Timiraos' view, the Fed may face two risks in terms of interest rate prospects: employment and inflation.

First, if there is a delay in interest rate cuts, it will lead to an increase in unemployment rate, making officials eager to implement larger scale interest rate cuts.

Second, if there is too much action in interest rate cuts, it will increase the possibility of inflation being "stuck" at the target level of 2%.

Wall Street Journal previously mentioned that this decision no longer emphasizes the "better balance of achieving employment and inflation goals," but instead refers to a "rough balance of achieving employment and inflation goals," and has added a description of "commitment to supporting full employment, emphasizing the avoidance of employment risks."

Timiraos' article also points out that based on Powell's remarks, he is trying to achieve a balance between expressing concerns about the economy and complacency about employment risks.

Some believe that taking measures to support the labor market is often done when it is still strong, rather than when layoffs start to occur.

Within the year, the Federal Reserve will also have two FOMC meetings in November and December. The article points out that the continued mixed economic signals continue to bring similar uncertainties to the next meeting.

Edit/Somer