On July 9, Federal Reserve Chairman Powell attended a monetary policy hearing of the Senate Banking Committee. His speech revealed the Fed's careful consideration in balancing the dual missions of maximizing employment and stabilizing prices, paving the way for future interest rate cuts.
On July 9, Federal Reserve Chairman Powell attended a monetary policy hearing of the Senate Banking Committee. His speech revealed the Fed's careful consideration in balancing the dual missions of maximizing employment and stabilizing prices, paving the way for future interest rate cuts.
Powell emphasized that the Fed continues to focus on promoting maximum employment and stabilizing prices. These two goals have made significant progress in the past two years. The risks between employment and inflation goals are now more balanced, but cutting interest rates requires evidence that inflation continues to approach the 2% target.
The U.S. economy is in solid shape, with strong growth in the second half of last year and slightly slower GDP growth in the first half of this year. Private domestic demand is strong, with solid consumer spending, rising capital expenditures, and a rebound in residential investment. Improved supply conditions have supported economic activity, but high inflation is not the only risk, and reducing policy restrictions too late or too little could harm economic activity and employment.
The labor market has recovered to pre-epidemic levels, with an unemployment rate of 4.1% in June and an average of 222,000 new jobs added per month in the first half of the year. The labor supply has increased, the employment gap has narrowed, and wage growth has slowed down. Although inflation has eased, it is still above the 2% target. In May, both personal consumption expenditures (PCE) and core PCE prices increased by 2.6%. Inflation has improved moderately recently, and long-term inflation expectations are under control.
Powell reiterated that monetary policy is aimed at promoting employment and price stability. The target range of the federal funds rate has remained at 5.25%-5.5% since July last year. The Fed continues to reduce its securities holdings and has slowed down the pace of balance sheet reduction since June. Restrictive monetary policy balances supply and demand and puts pressure on inflation. Before there is more confidence that inflation will continue to move towards 2%, it is not appropriate to lower interest rates, and decisions will continue to be made meeting by meeting.
Powell stressed the flexibility of decision-making and the independence of the Federal Reserve, which is not affected by political factors. The Republican senator of North Dakota warned, but Powell reiterated the principles of independence and data-driven decision-making. Analysts believe that this opens the door to a rate cut in September. Powell admitted that there have been changes in his assessment of the labor market, believing that it has cooled significantly and is no longer a source of general inflationary pressure. Powell's speech this time reflects the Fed's consideration and assessment of the economic environment, demonstrates flexibility and independence in decision-making, and provides the market with insights into policy direction. #币安合约锦标赛 #比特币超话 #以太坊超话 $BTC $ETH
