The United States maintains financial policy stability and delays policy changes
2023-08-30
■ Federal Reserve Chairman Powell hinted in Jackson Hall's speech that there will be no major changes in policy direction
■ Although the possibility of interest rate hikes has been preserved, there has been no mention of policy changes, and loose monetary policy may be extended
One of the most noteworthy events at the Jackson Hole Economic Policy Seminar held from August 24th to 26th was the speech by Federal Reserve Chairman Powell, who discussed future monetary policy directions on the 25th.
Summarizing the content of the speech, contrary to last year's clear indication of a significant tightening of monetary policy, this speech once again confirms the previous policy guidelines without significant changes. Due to the concise content of the speech and the absence of a Q&A session, specific clues regarding policies after September were not revealed.
The current monetary policy mainly focuses on the conversion process of monetary tightening at the end of the cycle. Regarding the future, Powell said: "Although it is expected that restrictive monetary policy will play a more important role in solving the distortion caused by the COVID-19 and the weakening of inflation. In order to keep the inflation rate back to 2%, it will take a period of time for economic growth to be lower than the trend and the labor market to slow down." This shows that although inflation is slowing down, he will still maintain a tight policy attitude. Although it was previously expected that significant interest rate hikes could slow down growth, it is currently recognized that the current economy has not been suppressed to the expected extent. If there is new evidence that economic growth exceeds the trend, he clearly stated that further interest rate hikes will be needed.
Based on the speech by Chairman Powell of the Federal Reserve, the FRB mentioned price stability in continuing to tighten monetary policy, but in future policy decisions, more emphasis will be placed on "data" related to economic activity and the labor market, rather than just price indicators themselves. In addition, although he mentioned the possibility of further interest rate hikes in the event of overheating, he did not mention the need for multiple future rate hikes, indicating that the main policy interest rate expectations of Federal Reserve Open Market Committee (FOMC) participants did not change significantly in June. However, the Chairman of the Federal Reserve did not mention interest rate cuts or a re examination of loose monetary policy. Considering that the US economy has exceeded the Federal Reserve's expectations, it may increase the likelihood that loose monetary policy will continue to exist for a longer period of time.
■ Although the possibility of interest rate hikes has been preserved, there has been no mention of policy changes, and loose monetary policy may be extended
One of the most noteworthy events at the Jackson Hole Economic Policy Seminar held from August 24th to 26th was the speech by Federal Reserve Chairman Powell, who discussed future monetary policy directions on the 25th.
Summarizing the content of the speech, contrary to last year's clear indication of a significant tightening of monetary policy, this speech once again confirms the previous policy guidelines without significant changes. Due to the concise content of the speech and the absence of a Q&A session, specific clues regarding policies after September were not revealed.
The current monetary policy mainly focuses on the conversion process of monetary tightening at the end of the cycle. Regarding the future, Powell said: "Although it is expected that restrictive monetary policy will play a more important role in solving the distortion caused by the COVID-19 and the weakening of inflation. In order to keep the inflation rate back to 2%, it will take a period of time for economic growth to be lower than the trend and the labor market to slow down." This shows that although inflation is slowing down, he will still maintain a tight policy attitude. Although it was previously expected that significant interest rate hikes could slow down growth, it is currently recognized that the current economy has not been suppressed to the expected extent. If there is new evidence that economic growth exceeds the trend, he clearly stated that further interest rate hikes will be needed.
Based on the speech by Chairman Powell of the Federal Reserve, the FRB mentioned price stability in continuing to tighten monetary policy, but in future policy decisions, more emphasis will be placed on "data" related to economic activity and the labor market, rather than just price indicators themselves. In addition, although he mentioned the possibility of further interest rate hikes in the event of overheating, he did not mention the need for multiple future rate hikes, indicating that the main policy interest rate expectations of Federal Reserve Open Market Committee (FOMC) participants did not change significantly in June. However, the Chairman of the Federal Reserve did not mention interest rate cuts or a re examination of loose monetary policy. Considering that the US economy has exceeded the Federal Reserve's expectations, it may increase the likelihood that loose monetary policy will continue to exist for a longer period of time.