In fact, Powell may have anticipated the deterioration of tonight's employment data, and the current market trading recession is also within expectations.
Powell's dovish remarks in his speech this week are not unrelated to the deterioration of today's job market data. I don't believe that Powell will not have any understanding of the job market data before the data is released.
So this might be expected.
I personally believe that the reason for doing this is to release market pressure in advance, allow the market to adapt, and prevent a strong impact from subsequent interest rate cuts.
At the same time, through Powell's speeches in recent years, we can clearly see that Powell is a cautious policymaker. When raising interest rates, he has been reminding people of the risks brought about by interest rate hikes, and when it is time to cut interest rates, he has been reminding people of the risks caused by cutting interest rates. This is an expression of Powell's clear view of the future direction of the US economy under the premise of caution, and it is also an expression of pessimism.
As a decision-maker who can get first-hand access to the overall economic data of the United States, he understands the gap between the current data and the actual situation of the United States. He also understands the potential economic crisis in the future and is deeply worried about it. The soft landing that the media has been advocating before may have always been a joke in Powell's heart.
So since Powell is pessimistic, he clearly knows that once the interest rate is cut, the risk factors in the economy will be infinitely magnified, and a hard landing may be the most optimistic performance, and even an economic recession may occur. Therefore, in the economic crisis, efforts to suppress inflation are a slightly effective defensive measure, which can at least ensure that people's livelihood and social security issues will not be the first to bear the brunt. So we were also curious before, why Powell is so obsessed with the issue of inflation.
Therefore, since market sentiment has already locked on a rate cut in September, if a crisis is triggered by the rate cut, it is better to release it in advance. After all, the economic recession caused by the job market can create panic, but it is not fatal. If all the problems are covered up and not triggered, a rate cut may trigger a fatal crisis. The negative situation brought about may also be the "stigma" that Powell does not want to see in his life.
Therefore, it may be better to allow the data on worsening employment to be directly presented to the public and release the negative effects of possible economic recession in advance, both in terms of emotion and reason, and in terms of public and private interests. I think this is also a disguised hard landing measure.
