According to the Zhitong Finance APP, TF SECURITIES released a research report stating that the September FOMC emphasized a slowdown in employment and raised the expectation for interest rate cuts in 2025; Powell stated: &#34;risk management cut,&#34; which is dovish but retains caution; in terms of market reaction, the market felt the caution behind Powell's interest rate cut. The future interest rate cut path of the Federal Reserve summarizes three scenarios: soft landing, recession, and high inflation. The soft landing scenario is the baseline scenario with the highest probability.
<h2>The main points of TF SECURITIES are as follows:</h2>
September FOMC: Emphasizes employment slowdown, raises interest rate cut expectations for 2025
In the September Federal Reserve meeting, the federal funds target rate was lowered by 25 basis points, in line with expectations, marking the first interest rate cut of the year. Overall, the statement from this meeting emphasized the risks of a downturn in employment, and the median dot plot indicates two more rate cuts within the year.
Meeting statement: Emphasizes the downside risks to employment. This statement removed &#34;the labor market remains robust&#34; and added &#34;employment growth is slowing&#34; and &#34;the downside risks to employment have increased.&#34;
Economic forecast: Improved growth expectations, moderate inflation adjustment. Compared to the June forecast, the Federal Reserve raised GDP forecasts for 2025, 2026, and 2027; slightly lowered the unemployment rate for 2026 and 2027; and raised the core PCE expectations for 2026.
Dot plot: The expectation for interest rate cuts in 2025 increased from two to three; subsequent expectations show increased divergence. FOMC members now expect a total of three rate cuts in 2025, with two more cuts within the year (the June dot plot predicted two total cuts in 2025). It is expected that there will be one more cut in 2026 and two cuts in 2027, further diversifying the outlook, indicating increased divergence within the committee.
Powell: &#34;Risk management cut,&#34; dovish but retains caution
Federal Reserve Chairman Powell's statement continued to be moderately dovish, stating that this is a &#34;risk management cut,&#34; and there is no need for a significant rate cut, with no guarantees for future rate cut paths.
Regarding employment, Powell stated that the unemployment rate remains relatively low but has risen, and the downside risks to employment have increased; he also pointed out that the slowdown in job growth is due to &#34;reduced immigration and a decline in labor force participation&#34; and that &#34;artificial intelligence (AI) may be one of the reasons for the slowdown in hiring.&#34;
Regarding inflation, Powell indicated that due to tariffs leading to rising commodity prices, inflation is expected to rise this year, but the baseline scenario is that the impact of tariffs on inflation is one-time, &#34;since April, the higher and more persistent inflation risks may have decreased.&#34;
Regarding the interest rate path, Powell stated that this rate cut is a &#34;risk management cut,&#34; and there is no need to cut rates by 50 basis points. For future policy paths, Powell stated that data will be monitored, and decisions will be made on a meeting-by-meeting basis.
In terms of market reaction, the market felt the caution behind Powell's interest rate cut
U.S. Treasury yields closed higher on the day, U.S. stocks were mixed, and gold closed lower. After the FOMC statement was released, both 2-year and 10-year U.S. Treasury yields fell, but as Powell's press conference progressed, Treasury yields rebounded; the dollar also fell and then rose; the main reason is that Powell remains cautious about the future interest rate path, emphasizing the tension between the dual goals of employment and inflation, and future decisions will still rely on data
Interest Rate Cut Expectations: CME data shows that market confidence in two more rate cuts this year has increased, but expectations for the pace of rate cuts in 2026 have been delayed.
The Future Rate Cut Path of the Federal Reserve: Three Scenarios
Three scenarios have been summarized for the future rate cut path.
Scenario 1 (Soft Landing Scenario): In this scenario, the U.S. economy achieves a basic &#34;soft landing,&#34; avoiding a major recession or stagflation. There will be two more rate cuts this year, and next year, as it is a mid-term election year, Trump may have political demands for rate cuts. Additionally, Trump is increasing his intervention in the Federal Reserve Board, and it is expected that three more rate cuts will be pushed forward.
Scenario 2 (Recession Scenario): The economy deteriorates beyond expectations, leading to a sharp rise in unemployment or risk events such as a &#34;stock market crash&#34; in the U.S. The Federal Reserve will significantly cut rates to support the economy, potentially even cutting rates by 50 basis points in one go.
Scenario 3 (High Inflation Scenario): A historically high inflation or even &#34;stagflation&#34; occurs, forcing the Federal Reserve to prioritize controlling inflation and maintain high interest rates for a longer period.
Scenario 1 is the baseline scenario with the highest probability; currently, the probabilities of scenarios 2 and 3 are relatively low. Among the six indicators used by the NBER to determine economic recession, the performance of non-farm employment growth and personal real consumption growth is weak, while the other four indicators have not yet entered a clear downward trend.
Risk Warning: Changes in the U.S. economic fundamentals exceed expectations, Trump’s policies exceed expectations, and the Federal Reserve's policies exceed expectations

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TF SECURITIES released a research report analyzing the future interest rate cut path of the Federal Reserve, summarizing three scenarios: soft landing, recession, and high inflation, with soft landing as the baseline scenario and the most probable. At the September FOMC meeting, the Federal Reserve emphasized the slowdown in employment and raised the interest rate cut expectations for 2025, expecting two more rate cuts within the year. Powell stated that rate cuts are for risk management, and the future rate cut path is uncertain

- Tianfeng Securities reports that the September FOMC emphasized slowing employment and raised the 2025 rate cut expectations, with Powell indicating a cautious approach to rate cuts.  
- The Fed's future rate cut scenarios include a soft landing, recession, and high inflation, with the soft landing being the most probable.  
- Market reactions showed mixed results, with increased confidence in two more rate cuts this year, while expectations for 2026 cuts have been delayed.

TF SECURITIES: The Federal Reserve has three possible scenarios for future interest rate cuts. Which one has the highest probability?