The minutes of the first meeting after Trump was elected were released.

On November 26, U.S. Eastern Time, the Federal Reserve released the minutes of the Federal Open Market Committee (FOMC) meeting from November 6 to 7.At that time, while the market generally expected inflation to rise, the dollar soared and U.S. bond yields rose. However, the Federal Reserve still resolutely cut interest rates by 25 basis points.

According to predictions in the latest meeting minutes, the Federal Reserve may cut interest rates by another 25 basis points in December.

In this report, the market pays special attention to the performance of the labor market.After October's non-farm payrolls data suffered severe hurricanes and large-scale strikes, several labor reports submitted by the United States were unsatisfactory, worrying analysts.

How the market thinks is one thing, how the Fed thinks is another.The report shows that despite broader indications that the labor market is gradually cooling, the Fed believes that the U.S. labor market remains solid, with low unemployment and limited layoffs.

This may indicate that it is unlikely that the Federal Reserve will cut interest rates on a large scale in the future.

On inflation, officials said price increases had dropped significantly from their peak, but pointed out that core indicators excluding food and energy were still "somewhat high."

The minutes of the meeting showed that "participants said they still believed inflation was moving towards 2% sustainably, although some officials pointed out that the process could take longer than previously expected."”

Among the latest October CPI data, rents and used cars contributed the most to inflation.Since the category of "owner-equivalent rent" accounts for a large proportion in the CPI, and this project is a follow-up project, the market generally expects that core inflation in the United States will only decline slowly rather than fall off a cliff.

Regarding neutral interest rates, officials are generally in agreement-as long as the data is generally in line with expectations-that inflation continues to approach 2%, and the economy remains close to maximum employment, so over time,"a gradual shift to a more neutral policy stance may be appropriate."

The question is how high long-term interest rates are.Many officials attending the meeting pointed out that "uncertainty about the level of neutral interest rates complicates the central bank's assessment of the extent of monetary policy restrictions." Powell also pointed out previously that long-term interest rates in the United States may be higher than before.

According to the September SEP forecast of the United States, the median interest rate in the United States will be 4.4% in 2024, 3.4% in 2025, and 2.9%. All three figures are much higher than the pre-epidemic average.At present, the Federal Reserve's benchmark interest rate is set at the range of 4.5%-4.75%, which shows that there is theoretically room for interest rates this year and next.

For the last policy meeting in December this year, the minutes mentioned that in the primary dealer survey and market participant survey of the open market department, the modal expectation of the vast majority of respondents was that a further interest rate cut would be 25 basis points in December. -The level of 4.25%-4.5% is roughly consistent with the median forecast of 4.4%.

However, after Trump gave aggressive tariff expectations and fiscal stimulus expectations, the market needs to be alert to the risk of a rebound in inflation, which may affect the Federal Reserve's interest rate cut process.Some FOMC officials already believe that if inflation remains high, the FOMC can suspend easing and keep interest rates at restrictive levels.