The Federal Reserve has struck again! On January 12th, it cut interest rates by 25 basis points, locking the rate in the 3.5%-3.75% range. This round of rate cuts last year has already totaled 75 basis points. It sounds like a move to rescue the market, but a comment from New York Fed President Williams—"no need to rush to cut again at the moment"—immediately stirred the markets.

How did the markets react? U.S. stocks surged—Dow Jones rose 0.38%, while the Nasdaq soared even more, jumping 1.31%. Chinese concept stocks also took off, with companies like Xiaopao Zhixing gaining nearly 12%. Gold prices also climbed above $4,340. Capital is frantically reallocating.

The issue here: Trump-nominated board member Milan wanted to push for a 50 basis point cut, but was pushed back and even voted against it. The independence of the Federal Reserve is starting to be questioned, and political games are gradually surfacing.

A more painful detail: the dot plot indicates that by 2026, there might only be one rate cut, and inflation remains stubbornly high. Employment data was also significantly revised downward—91,000 jobs vanished! Some analysts are saying the 2% inflation target might be completely abandoned.

Global markets are watching the Fed’s next move. China has gained policy maneuvering space, and the renminbi is showing resilience. But how long can Williams’ balancing act last? Has the rate cut cycle truly begun, or is this just a trap? The calm before the storm often deceives the most…