Federal Reserve Chairman Jerome Powell stated that a rate cut in December is far from a done deal!
Powell stated that the uncertainty surrounding the December interest rate actions needs to be considered, and the rate cut in December is "far from" a done deal. Traders have lowered their bets on a Fed rate cut in December, with the current probability of a cut estimated at 71%, down from the previous 90%. Currently, the three major indices have turned from gains to losses, and spot gold has fallen below $3,950 per ounce. Full text of the speech: On October 30th (Thursday) Beijing time, Federal Reserve Chairman Powell delivered a speech, stating that existing data indicates that the outlook for the U.S. economy has not changed significantly and is expanding moderately. Data prior to the government shutdown suggested that the economy might be moving toward a more stable trajectory; the government shutdown will temporarily drag down economic activity. Powell noted that inflation levels remain slightly elevated, and recent inflation expectations have risen; there is a need to manage the risk of inflation persisting for a longer duration. It is the responsibility to ensure that it does not become a persistent issue. Powell mentioned that the labor market appears to be gradually cooling; existing evidence shows that layoffs and hiring numbers remain low; the downside risks to employment seem to have increased. Powell stated that under reasonable baseline scenarios, the impact of tariffs on inflation will be temporary. He emphasized that there is no policy path with zero risk, and the risk balance has shifted; the Fed's rate cut is "another step toward a more neutral policy stance." Powell reiterated that the uncertainty surrounding the December interest rate actions needs to be considered, and the rate cut in December is far from a done deal
Powell stated that the uncertainty regarding the December interest rate actions needs to be considered, and the rate cut in December is "far from" a foregone conclusion.
Traders have lowered their bets on a Federal Reserve rate cut in December, with the current probability of a rate cut at 71%, down from the previous 90%.
Currently, the three major indices have turned from gains to losses, with spot gold falling below $3,950 per ounce.
Full Speech:
On October 30th, Beijing time (Thursday), Federal Reserve Chairman Powell delivered a speech, stating that existing data indicates little change in the outlook for the U.S. economy, which is experiencing moderate expansion. Data prior to the government shutdown suggested that the economy might be moving towards a more stable trajectory; the government shutdown will temporarily drag down economic activity.
Powell stated that inflation levels remain slightly elevated, and recent inflation expectations have risen; it is necessary to manage the risk of inflation persisting for a longer duration. There is a responsibility to ensure that it does not become a sustained issue.
Powell noted that the labor market seems to be gradually cooling; existing evidence indicates that layoffs and hiring numbers remain low; the downside risks to employment appear to have increased.
Powell stated that under reasonable baseline scenarios, the impact of tariffs on inflation will be temporary.
Powell mentioned that there is no policy path with zero risk, and the balance of risks has shifted; the Federal Reserve's rate cut is "another step towards a more neutral policy stance."
Powell stated that the uncertainty regarding the December interest rate actions needs to be considered, and the rate cut in December is far from a foregone conclusion.
Powell indicated that pressures in the money market require immediate adjustments to balance sheet operations; December will enter the next phase of the balance sheet, which will remain stable in the short term; there are "clear signs" that it is time to stop quantitative tightening; the reinvestment strategy will bring the weighted average maturity closer to the outstanding securities stock.
Powell noted that liquidity in the money market has tightened over the past three weeks, with bank reserves just slightly above adequate levels, and balance sheet decisions will give the market some time to adjust.
Powell stated that there are different forecasts and risk tolerances among various parties.
Powell mentioned that no decisions have been made today regarding the composition of the balance sheet, and portfolio rebalancing will take a long time and should be gradual; reserves will decrease but will not last too long, and the Federal Reserve will increase reserves again at some point.
Powell stated that monetary policy remains moderately restrictive, with non-tariff inflation not far from the Federal Reserve's 2% target, possibly only 0.5% to 0.6% higher; there is a firm commitment to restoring the inflation rate to 2%.
Powell indicated that the core personal consumption expenditures excluding tariffs could be 2.3% or 2.4%
