The Federal Reserve has made new moves. Powell suddenly spoke in advance at the Dallas Fed event, sparking market discussions. He said that the US economy has performed healthily recently and the Fed can adjust the pace of interest rate cuts more calmly. Powell also emphasized that there is no sign that interest rate cuts need to be accelerated. Surprisingly, he broke the routine this time and chose to directly release policy signals to the outside world at the event.
From the data, the US economy grew by 2.8% in the third quarter, exceeding expectations, mainly due to strong consumer spending, stabilization of corporate investment and continued resilience of the labor market. Although the Federal Reserve has been suppressing inflation by raising interest rates in the past two years, the unemployment rate remains below 4%. This set of data shows that the inherent driving force of the US economy is still reliable.
However, the Fed's "cautious" operation is not without risks. Against the backdrop of a weakening global economy, the policy rhythms of major economies are inconsistent, and US capital may accelerate its return, putting pressure on the currencies and bond markets of some emerging market countries. In addition, once the financial market's expectations of policies are biased, it may cause large fluctuations in asset prices, especially in the stock and bond markets.
From Powell's words, we can feel a kind of policy "balancing act". It neither makes the market overly optimistic nor sends pessimistic signals. The logic behind it is clear: the economy is good, so there is no need to rush into policy. But the problem is that the market's interpretation often goes astray. Once future data cannot keep up, or policy adjustments exceed expectations, this delicate balance may be broken. $ETHFI
