Powell is firm in his stance and reshapes the expectation of rate cuts!
1. Adhere to policy independence and reject market interference: In the face of frequent market speculation about rate cuts, Fed Chairman Powell made it clear that monetary policy adjustments will be strictly based on the actual situation of inflation control and economic growth, rather than short-term fluctuations in the stock market.
2. Focus on core indicators and ignore stock price noise: The Fed's decision-making focus has always been on assessing the trend of inflation and economic growth. Every ups and downs in the stock market are regarded as the scope of market self-adjustment rather than factors that directly affect policy changes.
3. The financial market is stable and the economic recession warning is too early: The current stock market fluctuations have not touched the bottom line of financial stability, and the signs of economic recession have not yet clearly appeared. Individual poor performances such as the employment report are seen as single events rather than the establishment of long-term trends, especially considering that the July data may be distorted by natural disasters and are expected to be corrected later.
4. The external environment is complex, and interest rate expectations need to be cautious: Although the decline of the artificial intelligence bubble and the uncertainty of the situation in the Middle East have triggered market concerns about slowing consumption growth and economic recession, providing soil for expectations of interest rate cuts, the Fed, especially FOMC members, tend to take a more cautious wait-and-see attitude.
5. The principle of political neutrality, resisting external pressure: Powell and the top Fed officials emphasized that they will strictly follow the principle of political neutrality in the decision-making process, not be influenced by any political forces, and ensure the independence and effectiveness of monetary policy.
6. Looking forward to future actions, the window for interest rate cuts may be after the election: Although the market generally expects that the Fed may cut interest rates by 25 basis points in September and then make further adjustments depending on the situation, most analysts believe that these actions are more likely to occur after this year's US election to avoid unnecessary interference in the election.