Under the spotlight of global financial markets, on December 20, the voices of several key Federal Reserve officials acted like a giant stone thrown into a calm lake, stirring up ripples and outlining the general direction of the Federal Reserve's future monetary policy for market participants. Among them, the remarks of Mary Daly, president of the San Francisco Federal Reserve Bank, and John Williams, president of the New York Federal Reserve Bank, became crucial breakthroughs for outsiders to gain insights into the Fed's internal interest rate decision discussions.
In her recent public speech, Daly deeply analyzed the considerations behind the Federal Reserve's decision to cut interest rates by 25 basis points this week. She stated that this was by no means an easy decision but a difficult choice made after repeated weighing and careful consideration within the Federal Reserve. Daly clearly aligned herself with Chairman Powell's stance, repeatedly emphasizing that adjustments to future monetary policy must be made with utmost caution. She solemnly declared that the Federal Reserve has successfully completed the critical phase of recalibrating interest rates, which means that an important milestone in the previous interest rate adjustments has come to a close. Daly further revealed that, considering various factors, a cumulative rate cut of 100 basis points is just right, and she acknowledged the Federal Reserve’s forecast of two rate cuts in 2025. However, Daly also emphasized to the market that before discussing whether to initiate a new round of rate cuts, the Federal Reserve would inevitably adopt an extremely rigorous attitude, patiently waiting for more decisive economic information to surface. According to her judgment, the actual number of rate cuts next year is likely to be far lower than the general expectations in the market.
Coincidentally, on the same day, John Williams, president of the New York Federal Reserve Bank, also shared his profound insights on the current economic situation and its relation to monetary policy in a public venue. His views echoed those of Daly but with different emphases. Williams clearly pointed out that based on the detailed data currently at hand, the benchmark path clearly points toward further rate cuts. As a core member of the Federal Open Market Committee (FOMC) with permanent voting rights, every word from Williams carries significant weight and is closely watched by the market. His statements reveal that there is a certain possibility of rate cuts supported by the existing economic data, while also emphasizing that despite this, the Federal Reserve remains vigilant and will continuously monitor various economic indicators' dynamic changes as precise guidance for subsequent decisions.
From the remarks of these two Federal Reserve officials, it is not difficult to see that in today's rapidly changing and complex global economic environment, the Federal Reserve is maintaining a highly cautious attitude, carefully balancing the nuances of monetary policy. Daly focuses on conservative actions, using patience to await more data for decision-making certainty, while Williams highlights the potential trend of rate cuts based on current information. Ultimately, both convey a clear message: the next steps of the Federal Reserve will be closely tied to the performance of the U.S. real economy, inseparable. This fully demonstrates the Federal Reserve's unwavering determination—to use monetary policy to inject continuous momentum into economic growth while ensuring that price levels remain stable and controllable, thus achieving robust and sustainable economic development.
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