According to Fidelity International, the Federal Reserve has indicated that the upward inflation risk has diminished while the downside risks in the labor market have increased. The decision to cut interest rates by 0.5% was made, lowering the federal funds rate target to 4.75% to 5.00%. This is the first rate cut since July 2023, after keeping policy rates at 5.25% to 5.5% for 8 consecutive times. This ends the most aggressive rate hike cycle since the 1980s. The U.S. economy is heading towards a soft landing (low growth and low inflation), and it is expected that under the Fed's accommodative financial conditions, the risk of recession should not materialize. However, due to increasing political uncertainty and Fidelity's leading indicators slowing down, along with negative seasonal factors, Fidelity is now seeking better risk-return opportunities. Therefore, a neutral investment rating is given for stocks, and a neutral investment rating is maintained for credit bonds. Given the escalating signs of conflict in the Middle East and Russia-Ukraine, and the intensifying stage of the U.S. election in November, investment strategy recommends a global high-quality dividend strategy and global high-quality bonds as the core assets to combat market volatility, with a positive outlook on tech stocks in the long run. The five key points in the post-Fed meeting statement include: 1) Risk of progress in inflation declining: The statement after the meeting added greater confidence in the inflation rate steadily moving towards 2%, with members firmly committed to supporting full employment and returning inflation to the 2% target; in terms of median PCE inflation rate, this year's forecast is revised down from 2.6% to 2.3%, and for 2025 from 2.3% to 2.1%; the long-term level remains unchanged at 2%. The median estimate for core PCE inflation rate is revised down from 2.8% to 2.6% for this year, and from 2.3% to 2.2% for next year. 2) Risks of a slowdown in the labor market increasing: The statement after the meeting adjusted moderate employment growth to slow employment growth, indicating an increase in the risk of labor market cooling. The median estimate of the unemployment rate is revised up from 4% to 4.4% for this year, from 4.2% to 4.4% for next year; the long-term level remains at 4.2%. 3) Downward revision of this year's economic growth expectations: In terms of the Summary of Economic Projections (SEP), the median forecast for economic growth rate is revised down from 2.1% to 2% for this year, remains at 2% for next year, and remains flat at 1.8% for the long term. 4) There is still room for a 0.5% rate cut by the end of the year: The dot plot shows a 0.5% room for rate cuts by the end of the year, with the possibility of 0.25% rate cuts in the November and December meetings, a 1% cut in 2025, and a 0.5% cut in 2026. The long-term rate level is raised from 2.8% to 2.9%, and the neutral rate may be higher than before the pandemic. 5) Future policy depends on data trends: Chairman Powell stated that the 0.5% rate cut is not a new step for future rate cuts, and future monetary policy will still depend on economic data trends. In addition, he stated that the Fed is not considering stopping the reduction of its balance sheet, and can simultaneously shrink the balance sheet and cut rates as long as bank reserves remain stable. Fidelity International's macro and strategic asset team stated that it was a heated debate at the meeting whether to cut rates by 0.25% or 0.5%, and the Fed ultimately decided to cut rates by 0.5% considering the continued decline in inflation and the cooling labor market in recent months; however, both the dot plot and Powell's post-meeting press conference emphasized a more cautious approach to the speed and magnitude of future easing policies. Overall, while the Fed has initiated a rate cut cycle with a 0.5% cut, their hawkish tone suggests that the Fed has opened the door to rate cuts, and the market understands that if the labor market weakens again, the Fed will accelerate the pace of rate cuts. Fidelity believes that a soft landing is still the most likely economic scenario for the year.