Let me explain my understanding of Powell's speech at night: it may return to the monetary policy framework before 2019, shifting from "focusing on whether the average inflation target (AIT) in the past period has reached 2%" to "only focusing on whether the current inflation target (IT) has reached 2%". But why is it said to be laying the groundwork for interest rate cuts? Because if we still operate according to the AIT (Average Inflation Rate) framework, since inflation has been consistently above 2% since 2021, the Federal Reserve should keep inflation below 2% for the next 3-4 years to ensure that "average inflation=2%". This means stronger tightening expectations. But Powell also stated in this meeting that the post pandemic Federal Reserve has already returned to the traditional IT framework in a factual sense, and AIT has become irrelevant in our policy discussions. So abandoning the average inflation target system means that inflation above 2% in the past few years does not necessarily mean that the Federal Reserve needs to push inflation below 2% in the future. This implies a relatively loose monetary policy at the margin, which is also the reason why the 2-year US bond yield (short-term interest rate) rapidly declines at night Of course, my previous statement that there is no need to wait until inflation reaches 2% is not accurate, but rather to say that there is no need to wait until inflation returns below 2% to achieve the requirement of an average inflation rate of 2% in order to achieve the inflation target.