Powell’s “empty” speech could not convince many local Fed officials to “siege” him
News from the Financial Associated Press (Shanghai, Edited by Ale),The Jackson Hole Annual Conference kicked off on Friday (August 27) in Powell’s speech on economic prospects. Powell consolidated his expectations of reducing QE during the year and clearly suppressed the relevance to future interest rate hikes. The ambiguity makes the market think he is biased towards “doves.”
The zero hedge comment on the financial blog stated,Powell did not provide actual signals to reduce debt purchases. His speech was like a “Nothingburger.”He may wish to see more employment growth to show that the labor market is making “substantial further progress.”
Goldman Sachs commented, “Powell is in line with our expectations, and we think it will officially start to reduce the scale of debt purchases in November.” Goldman Sachs’ model shows that the probability of starting to reduce the scale of debt purchases in November is 45%, and in December it’s 35%. Next year The probability is 20%.
Ian Shepherdson, chief economist at Pantheon Macro, also believes that the reduction will officially begin in November. “In short, the overall tone remains the same. But if the Delta virus crisis lasts longer, (the reduction) can easily be delayed.”
Powell’s speech was “satisfactory and without bright spots.” This obviously does not conform to the thinking of some hawks or centrist officials of the Fed. Several Fed officials launched a “siege” on it:
Kaplan & Brad reiterated that asset purchase adjustments should be started as soon as possible
Following yesterday’s release of “Eagle”, Kaplan and St. Louis Fed President Brad once again reiterated their “hawkish stance” an hour before Powell’s speech.
Dallas Fed President Kaplan said,The Fed should start asset purchase adjustments as soon as possible, and the reduction in bond purchases should be completed in about 8 months.
Kaplan said that price pressures will amplify the supply imbalance, and the imbalance between supply and demand may last longer than expected. He believes that next year’s inflation rate will be in the range of 2.5%, but this number may rise.
St. Louis Fed President Brad 20 minutes before the start of Powell’s speechI reiterate the hope that the code reduction will begin now and it will be completed in the first quarter of 2022. He supports the monthly reduction of US$20 billion in national debt and the reduction of US$10 billion in mortgage-backed securities.
He said very directly that there is not much value in the current bond purchases, which is one of the tightest job markets we have seen in recent decades. “Asset purchases are currently not helping the economy much, and may only lead to rising housing prices and commodity prices.”
Hack: Don’t allow excessive inflation to continue
After Powell’s speech, Philadelphia Fed President Hacker said that the risk of inflation is significantly higher than the Fed’s expected level, and it may last longer than we thought. He still expects the inflation rate to fall back to the 2% target.
Hacker said, “Some evidence shows that the current high inflation may not be so short-lived, and I am worried that this is a risk.” If inflation does not fall, the Fed will need to change its policy.
Business contacts in the Philadelphia Fed’s area said they saw obvious price pressure, and Hack said, “What I heard is that they have tried not to pass most of the inflation to consumers and customers… in other words,Part of the inflation has been passed on to consumers.This is inevitable. “
Huck said, “We need to control this situation.“Before the U.S. stock market on Friday, the U.S. Department of Commerce announced that the Fed’s favorite inflation indicator-the U.S. Core Personal Consumption Expenditure Deflator (PCE) in July rose 3.6% year-on-year, the fastest growth rate in nearly 30 years.
Meester: “It’s time to slow down”
Cleveland Federal Reserve Chairman Meester said after Powell’s speech,Now that the “basically reached” standard to start to reduce the size, it is time to start reducing asset purchases.
She said that she hopes to take the opportunity of the September FOMC monetary policy meeting to discuss the timing of the code reduction and the speed of adjustment.She prefers to start the reduction before the end of this year and complete the reduction process before the middle of 2022.Once the asset purchases are over, the Fed still has time to evaluate economic data. Meister also emphasized that raising interest rates is not a current issue and needs to be carried out after the reduction is completed.
Mestre believes that the United States has not yet achieved full employment. She also predicts that inflation in the United States at the end of this year will be 3.5%-4.0%, which may fall back in 2022. Meester believes that the reduction plan that should start in November or December and end in mid-2022, although she started to reduce bond purchases later than other committee members, she plans to move faster than others.
Meister is not as hawkish as the above-mentioned officials, butThe outside world has always believed that Meester’s position is closer to the Fed’s policy direction.So the dollar index jumped after Meester’s speech.Return to Sohu to see more
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