The Federal Reserve is about to release its highly anticipated interest rate decision, which is expected to be announced at 2 a.m. the following day. The market generally expects that the Fed may implement a 25 basis point rate cut. If this rate cut is implemented, it will be seen as a preventative measure aimed at addressing the situation where employment data, while robust, has shown a slight decline. This is fundamentally different from the emergency rate cut of 150 basis points during the crisis period in 2020.

Half an hour after the interest rate decision is announced, the speech of the Fed Chairman will become the focus of market attention. Market reactions may vary depending on the different scenarios that may arise. If the rate cut is in line with the expected 25 basis points, there may be a short-term pullback after the positive news is realized, but in the long run, it may help stabilize market confidence. However, if the Fed decides not to cut rates or exceeds expectations with a 50 basis point cut, both could be seen as negative signals by the market—the former could undermine market confidence, while the latter could trigger concerns about an economic recession.

Looking ahead to the whole year, the ideal pace of interest rate cuts may be to carry out 2 to 3 cuts, each by 25 basis points. However, it is important to be vigilant, as a faster pace of cuts may signal that the economic fundamentals are deteriorating more than expected.

Considering the potential for significant market fluctuations during the announcement of the Intrerest Rate decision and the Fed Chairman's speech, it is advisable for investors to avoid short-term operations during this period. A wiser approach is to wait until the news is fully digested and the market sentiment stabilizes, and then enter the market at the right time based on actual conditions. This can help avoid triggering unnecessary stop-losses during volatile periods, thereby better seizing market opportunities.