Beijing time, February 25th – Multiple Federal Reserve officials made intensive remarks, sending conflicting signals on the monetary policy path, which led to significant fluctuations in market expectations for interest rate cuts. U.S. stocks and bonds reacted sharply to this, with the Treasury yield curve showing a mixed trend of ups and downs, while the U.S. dollar index edged up to 97.90, reflecting a cautious rise in market sentiment.

Fed Governor Lisa Cook warned that the AI investment boom may push up structural unemployment and the neutral interest rate, and that interest rate cuts alone cannot solve this new type of economic dilemma. Meanwhile, Atlanta Fed President Raphael Bostic emphasized that inflation control remains the top priority, calling for safeguarding the Fed’s policy independence and opposing premature easing of monetary policy. In contrast, Chicago Fed President Austan Goolsbee called for a pause in interest rate cuts, arguing that it is inappropriate to take aggressive easing actions until inflation clearly returns to the 2% target.

At the market level, the futures spread linked to the Secured Overnight Financing Rate (SOFR) is deeply inverted, indicating that traders still bet that the interest rate cut cycle will continue until 2027, but the probability of a short-term rate cut has dropped significantly. In the bond market, the 2-year U.S. Treasury yield rose 2.73 basis points to 3.461%, while the 10-year and 30-year long-term Treasury yields fell slightly, further flattening the yield curve. Analysts pointed out that the division among officials will greatly increase the decision-making difficulty of the Fed’s March monetary policy meeting, and the market needs to prepare for a long period of high interest rates.