Analysis: The Fed is not as hawkish as expected; the rate-cutting cycle continues.

The Federal Reserve signaled this week that it is open to further rate cuts in 2026, a move welcomed by investors. Markets had previously braced themselves for a "hawkish" rate cut—lowering the benchmark federal funds rate—while strongly hinting at a reluctance to make further adjustments. U.S. stocks rose along with bonds, with the Dow Jones Industrial Average climbing nearly 650 points (1.3%) on Thursday, hitting a record high. Despite internal divisions within the Fed and mixed signals released on Wednesday, many still see signs that even a slight further weakening in the labor market could prompt the central bank to cut rates again in the coming months. The Fed's announcement that it will expand its balance sheet by purchasing short-term Treasury securities, a move aimed at easing recent pressures in the overnight lending market, also encouraged investors. Investors expect the Fed to be significantly different next year, with Trump beginning final interviews this week with potential successors to Powell. (Jinshi)