Powell’s Heavy Speech…
On Thursday, the day before Fed Chairman Powell Jackson Hole’s heavy speech, several hawkish officials of the Fed delivered speeches. The core point is that the Fed wants to reduce QE. Even if the Delta virus is severe now, its impact on the economy has not yet been seen.
Kaplan said that he maintains his expectations of the U.S. economy and the Fed’s downgrading of QE prospects unchanged. Still inclined to the FOMC’s decision to start the QE reduction at the September monetary policy meeting, and to implement the QE reduction in October or shortly thereafter.
Kaplan said that the Fed’s bond purchases support demand, but the demand side (inherently) is not a problem. The unexpected effects/side effects of bond purchases make him worry.
Kaplan revealed that the companies he contacted stated that they are defending against the influence of the Delta mutant virus. As the new crona vaccination rate increases, we see more economic resilience.
Kaplan is a well-known hawk among Fed officials and has voting rights in 2023. Last Friday, he softened his stance, saying that he is closely monitoring the impact of the Delta virus on the US GDP. If the damage from the Delta virus recovers, his expectations of QE reduction may change.
Brad is the FOMC voting committee next year. He said that the Fed needs to reduce the scale of bond purchases and end QE by March 2022. At this point in March next year, the Fed will decide when to raise interest rates from zero to win the “option”: at that time, it depends on whether inflation has cooled down, and if not, then more radical policies are needed to reduce inflation. But Brad did not express his preference for when to raise interest rates.
Inflation is a concern for Brad. He said that inflation is higher than expected, and that inflation will reach at least 2.5% in 2022. Don’t want too high inflation, which will hurt the poor in the United States.
Brad believes that the American economy has learned to adapt to the epidemic. Although there is a risk of Delta mutant virus, the economy is still growing strongly and does not need more stimulus.
Brad also pointed out that there is some evidence that the Federal Reserve’s bond purchases have begun to create a bubble in the US real estate market.President George of the Federal Reserve Bank of Kansas George said that now is the time for the Fed to start reducing QE. The job market is progressing, and inflation continues to rise. The US economy has reached the point where the Federal Reserve can begin to withdraw its ultra-loose monetary policy.
Jackson Hole Global Central Bank Annual Meeting Debuts on Friday, Powell’s Speech has attracted much attention
The world’s eye-catching annual meeting of global central banks will officially kick off on Friday. The theme of this meeting is “Macroeconomic Policy in an Unbalanced Economy”. Friday 22:00) Give an online speech on economic prospects.
The annual Jackson Hole Global Central Bank Conference is held at a time when the market is paying close attention to how the Fed will start Taper. At that time, every word of Powell’s speech will be pondered over and over again, affecting the market’s nerves.
Goldman Sachs (412.41, -0.71, -0.17%) previously predicted that Powell would acknowledge the progress made in the labor market to maintain the market’s warning for the Fed’s Taper warning in September and formally announced its expectations for Taper in November. But Powell will cautiously avoid the market locking in expectations of Taper’s time, leaving room for possible changes in the future.