Powell’s delicate balancing act
Market HighlightsThe Fed sees a two-way risk for its restrictive monetary policy stance. In his semiannual monetary policy testimony to Congress, Fed Chair Powell has acknowledged
应用介绍
Market Highlights
The Fed sees a two-way risk for its restrictive monetary policy stance. In his semi
annual monetary policy testimony to Congress, Fed Chair Powell has acknowledged
that disinflation has resumed at a modest pace following a lack of progress early this
year. But he has warned that cutting rates too early or by too much could risk reigniting
a pickup in price pressures. More “good” inflation data showing a return to the 2%
target is needed for a policy pivot. Powell has also said that a lesson learnt from the
high inflation period in the 70s is that policymakers need to stick to their task of fighting
inflation until it is beaten. Yet, policymakers are also concerned that cutting interest
rates too little or too late could weigh on growth and employment. That weakness has
not developed yet, according to Powell, with the labour market only becoming more
balanced and conditions returning to where they were before the Covid pandemic, i.e.
“strong but not overheated”.
Overall, we think the next Fed
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