On March 26, Morgan Stanley's Fixed Income Investment Department's Cui Can stated in a post that during the Federal Open Market Committee (FOMC) meeting in March 2024, all officials unanimously voted to maintain the federal funds rate target range at 5.25%-5.5%. This was the sixth time they had paused rate hikes since the rate was increased in July 2023. Compared to the "balanced risks" of January, the overall tone of the March meeting was dovish. The March statement was similar to January with one key difference being the assessment of the job market, which changed from "job growth continues to slow down" in January to "job growth remains strong" in March. Economic forecasts continued to be adjusted in an optimistic direction, including upward revisions in inflation, GDP growth expectations, and downward revisions in the unemployment rate outlook. Over the next two years, the federal funds rate is expected to increase, with the rate rising from 3.6%/2.9% in 2025/2026 to 3.9%/3.1%. Long-term rate forecasts saw a slight increase of 10 basis points, the first increase since the pandemic. The median forecast for the federal funds rate at the end of 2024 was 4.6% (unchanged from the previous value), corresponding to a 75 basis point rate cut, consistent with the forecast in December. The dot plot indicated that if data remained strong, there was a risk of further rate cuts. Additionally, Federal Reserve Chair Powell leaned dovish during the press conference, stating that the higher-than-expected inflation data in January had seasonal factors, and although inflation in February was still high, it was 30 basis points lower than the core PCE. Powell expressed confidence that inflation would continue to move towards the target level. He also mentioned that strong employment was mainly due to easing supply-side factors and not a cause for concern regarding inflation. When asked if there would be a rate cut in May, Powell did not rule out the possibility, stating that unexpected market developments could occur between each meeting, especially if the labor market weakened, then a rate cut would be appropriate, but currently, he did not see that happening. Regarding tapering, Powell mentioned that the Fed was discussing details about slowing the taper but had not made a specific decision yet. The Fed would soon slow down the pace of reducing Treasuries and MBS each month, but this did not mean that the Fed's balance sheet would stop shrinking, it would just reduce some pressure on market liquidity. Although the Fed was discussing details about slowing the taper, they had not made a specific decision yet. Cui Can noted that overall, Powell believed that short-term fluctuations in inflation data did not change the downward trend, and concerns about second-round inflation were low. He tended to take some preemptive measures to prevent risks. After the FOMC meeting, futures implied a slight decrease in the terminal policy rate by 3 basis points to 5.29%, the two-year Treasury rate decreased by 11 basis points, the ten-year Treasury rate remained stable, and the yield curve steepened. Although the overall tone was dovish, it was difficult for the market to significantly trade on rate cut expectations with data support. It was expected that the rate cuts in the US this year were more for preventive purposes. Fundamentally speaking, the US dollar still had a relative advantage, and rate cuts might not drive a substantial decline in the US dollar index.