Over the past two years, Federal Reserve Chairman Jerome Powell has focused steadfastly on fighting stubborn inflation, a strategy that has temporarily curbed price rises but also inevitably raised the risk of a recession. Now, Powell is pushing the U.S. economy to a critical crossroads. The next few months will be crucial for the U.S. economy. The Fed's top priority is to control inflation without bringing down the economy, while ensuring that there is no liquidity crisis in the U.S. bond market. The timing and magnitude of interest rate cuts will test the decision-making wisdom of Fed officials, and these decisions will determine the final outcome of this long battle against inflation. If Powell can succeed in lowering inflation without significantly raising unemployment, it would be a historic achievement.
Powell and other Fed officials have recently frequently hinted that they may begin to cut interest rates at the September meeting. Although inflation has shown a downward trend, the recent weakness in the job market has raised new concerns. The surge in the unemployment rate in July triggered sharp fluctuations in financial markets on August 5. The non-farm revised data released on Wednesday showed that the hot job market from the beginning of 2023 to the beginning of this year was full of water behind the data. The Labor Department said that in the year ending in March, the job data was revised downward by at least 800,000.
Powell will deliver a keynote speech at the central bank's annual meeting at 22:00 tonight. As the September interest rate meeting approaches, every public speech he makes will be closely watched by the market, trying to interpret his role in reducing inflation and avoiding further unemployment. The trade-off between rising. Now is a critical moment that determines the success or failure of the fight against inflation. In addition to expecting to continue to release dovish signals, we are more concerned about whether he will explain to the public the path of future interest rate cuts. There are two paths for the Fed's future actions. The first is a gradual interest rate reduction strategy, which means reducing interest rates by 25 basis points each time in the next few meetings, and adjusting the rate of interest rate cuts based on changes in economic performance. If signs of an economic slowdown become more apparent, the Fed may choose path two, which is to cut rates by a few quick 50 basis points, which would ensure rates return to pre-pandemic levels by early next year. However, history shows that the Fed tends to be cautious about cutting interest rates significantly, usually taking such a step only when economic data is significantly weaker than expected or there is significant stress in credit markets. In fact, when the Federal Reserve was forced to cut interest rates sharply due to out-of-control unemployment, recession was inevitable. This was actually a way to make up for the mistakes after admitting to the market that the policy had failed.
Judging from the market and the performance of stocks and bonds last night, "funds flowing back to stocks and bonds + expectations of dovish speeches + convergence of volatility", there is a relatively high possibility that Bitcoin will break through the range tonight.#杰克逊霍尔年会
