Summary of Key Points from Powell's November Press Conference

Wallstreetcn
2024.11.07 20:14

  1. Interest Rate Policy: As we approach the neutral interest rate, it may be appropriate to slow down the pace of rate cuts. However, we have just begun to consider adjusting the pace of rate cuts. We will not rule out any possibilities for 2025 and cannot afford the consequences of "preemptively excluding anything from happening throughout the year."

  2. Inflation: The Federal Reserve removed the wording regarding inflation from the first rate cut (50 basis points) announced on September 18. There is no need to let inflation cool further to maintain the responsibility of price stability. The previously released inflation data is not bad, but indeed higher than expected. (Non-farm payroll data indicates) wage growth is still slightly above the level consistent with the 2% inflation target.

  3. Employment: The job market continues to cool very slowly and has not yet fully stabilized.

  4. U.S. Treasury Yields: It seems that the bond market is not driven by inflation being higher than expected. There is not much more to say about the factors driving U.S. Treasury yields.

  5. Potential Changes in the Election and Fiscal Policy: I do not want to discuss any issues related to the U.S. election. Election issues will not affect FOMC policy in the short term, and it is unclear when and how changes in fiscal policy will occur. We will not speculate, conjecture, or assume about fiscal policy. The scale of U.S. federal debt is unsustainable, and the inertia in handling debt issues is of significant importance.

  6. Future of the Federal Reserve Chair and Independence of the Federal Reserve: I will not resign as Federal Reserve Chair because of a request from Trump. U.S. law does not allow the federal government to demote numerous Federal Reserve Chairs.

  7. Market Reaction: The two-year U.S. Treasury yield briefly rebounded above 4.25% before falling back to near the day's low of 4.1848%. Spot gold rose over 1.7%, reaching a daily high of $2,705.20; it had fallen back to near $2,688 during the press conference

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