Tom Porcelli, chief U.S. economist at PGIM Fixed Income, stated that considering the "hawkish rate cut" in December, the Federal Reserve will pause rate cuts at the January meeting, waiting for more data to decide whether to continue or end the current rate cut cycle. Powell's relatively hawkish stance caused a decline in the U.S. fixed income market. The market had initially expected a 50 basis point rate cut by 2025, but after the press conference, the expected rate cut quickly dropped to 30 basis points. With the expected rate cut decreasing, short-term rates fell by 10-15 basis points, while long-term rates fell by 8 basis points, flattening the yield curve. Risk assets experienced significant volatility, with a 3% drop in the stock market and widening spreads on U.S. high-yield products. He stated that for the Federal Reserve, the outcome of 2024 is more important than the beginning. On December 18, in the U.S., the Fed cut rates for the third consecutive time, lowering the federal funds rate target by 25 basis points to 4.35%. As the year draws to a close, the FOMC issued unexpected signals, suggesting that due to expected higher inflation and economic growth in 2025, the pace of rate cuts next year will slow down. Therefore, the Fed hinted that in 2025, it may only cut rates by 50 basis points, half of what was expected in September this year. However, according to another market perspective, the Fed raised its terminal rate to 3.1%, 75 basis points above the low point in 2021, indicating that the current policy stance is less restrictive than previously expected. Additionally, considering that one committee member held a dissenting opinion, voting to keep rates unchanged, and also due to stubborn inflation and slowly rising unemployment, Fed Chair Powell's "data-dependent" approach will still be key to reaching a consensus at the FOMC. Although the Fed's policy target cut indicates weakening labor market conditions, PGIM believes that whether further rate cuts will depend on whether inflation continues to decline. Changes in the Summary of Economic Projections (SEP) seem to suggest that the Fed may change its policy to achieve the dual mandate of inflation and employment. Fed Chair Powell pointed out that the labor market still faces challenges, such as declining recruitment and quit rates, and slowing labor demand. However, given the recent stagnation in the anti-inflation process, inflation stickiness has once again become a focus of the market's attention. Therefore, the Fed even raised its 2025 inflation forecast, increasing the core personal consumption expenditure (PCE) price index from 2.2% to 2.5%, exceeding market expectations. Meanwhile, after two anticipated rate cuts in 2025, the median forecast for the federal funds rate is expected to reach 3.9% by the end of next year, up from 3.4% three months ago. Powell's response to the potential impact of tariffs fully reflects the Fed's concerns that inflation may still be above target. While Powell did not completely deny the views on tariffs, considering that there is currently no specific data, Powell could only avoid discussing the issue.