Policy Decision and Market Reactions:

The Federal Reserve lowered the target range for the federal funds rate to 3.75%-4.00%, marking its second interest rate cut this year. It also announced that its quantitative tightening program would end on December 1st. Starting from that date, the Fed will reinvest maturing Treasury securities and shift proceeds from maturing mortgage-backed securities (MBS) into short-term Treasury bonds. This decision aims to alleviate liquidity pressure in the money markets, in line with most institutional expectations.

However, during the press conference, Powell repeatedly stressed that "inflation is still far above the target level" and made it clear that the December meeting "will not preset the policy path." He particularly pointed out that despite signs of cooling in the labor market, job vacancy rates remain relatively high, and wage growth pressures have not fully eased. This series of statements led to a drop in the market’s expectation of a rate cut in December, from 90% before the meeting to 71%, which triggered a downturn in the stock market.

Divisions Within the Decision-Making Body:

During the press conference, Powell explicitly noted that there are "strongly differing views" within the committee about the future monetary policy path. He also mentioned that a rate cut in December is "far from a foregone conclusion." The voting results of this decision showed a 10-2 division: Kansas City Fed President Esther George argued to keep rates unchanged, citing inflation risks, while Fed Governor Michelle Bowman pushed for a 50 basis point rate cut to counter potential economic slowdown.

It’s also important to note that some U.S. government agencies are currently shut down, delaying the release of key economic data, which complicates the Fed's "data-dependent" decision-making process.

Technical Market Impact:

Following the announcement, the S&P 500 index reversed course and ended flat at around 6850 points. The U.S. Dollar Index rebounded strongly by 0.4%, while the 2-year U.S. Treasury bond yield rose by 9.2 basis points, the largest one-day increase in nearly four months. Technically, the S&P 500 is facing clear resistance around 6900 points, and if it fails to break through, it could test the 6750-point support level.

Future Outlook:

In the next 1-3 months, the market may hover around the key question of whether the Fed will cut rates in December. Without clear policy guidance, the stock market may adopt a "wait-and-see + event-driven" strategy. Investors should pay close attention to employment data, inflation indicators, government shutdown developments, and the liquidity status of the banking system.

In conclusion, while the Fed’s rate cut and end to balance sheet reduction may seem to signal support for economic growth and markets, internal divisions, data delays, and Powell’s cautious tone remind the market that monetary policy is not a straightforward downward path. It is more like "pressing the brake" while testing the "accelerator." For the stock market, this means that opportunities in a loose environment still exist, but the process of valuation recovery may be slower and more volatile than expected. Investors should adopt a cautious, phased, and flexible approach in market participation.