Powell Thinks Rate Rises Are Working. Is He Right?

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Powell Thinks Rate Rises Are Working. Is He Right?

The Australian Financial Review2022-07-28

It was subtle, but Jerome Powell gave the air of someone with more command over his mandate than any time this year. The Fed chairman, however, has no control over global instability.After the ...

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ccy1122
·2022-07-28
[OK] [OK] [OK] [Like] [Like] [Like]
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patrickLai
·2022-07-28
Raise & see the death
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Huhu88
·2022-07-28
Thanks
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The Fed chairman, however, has no control over global instability.After the ...</p>\n\n<a href=\"https://www.afr.com/world/north-america/powell-finds-slightly-more-dovish-voice-as-fed-tightening-takes-hold-20220728-p5b57e\">Source Link</a>\n\n</div>\n","source":"afr_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Powell Thinks Rate Rises Are Working. 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Is He Right?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-07-28 10:20 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.afr.com/world/north-america/powell-finds-slightly-more-dovish-voice-as-fed-tightening-takes-hold-20220728-p5b57e><strong>The Australian Financial Review</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It was subtle, but Jerome Powell gave the air of someone with more command over his mandate than any time this year. The Fed chairman, however, has no control over global instability.After the ...</p>\n\n<a href=\"https://www.afr.com/world/north-america/powell-finds-slightly-more-dovish-voice-as-fed-tightening-takes-hold-20220728-p5b57e\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".SPX","symbol_name":"S&P 500 Index","start_time":0,"source_url":"https://www.afr.com/world/north-america/powell-finds-slightly-more-dovish-voice-as-fed-tightening-takes-hold-20220728-p5b57e","article_id":"2254239152","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2254239152","pubTimestamp":1658974834,"sourceInfo":{"source_id":"afr_stock","name":"The Australian Financial Review"},"weMediaInfo":null,"summary":"It was subtle, but Jerome Powell gave the air of someone with more command over his mandate than any","collect":0,"end_time":0,"defaultTopTitle":"afr.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".SPX":"S&P 500 Index","XJO.AU":"标普/澳交所 200指数","XKO.AU":"标普/澳交所 300指数",".DJI":"道琼斯",".IXIC":"NASDAQ Composite","XAO.AU":"标普/澳交所 普通股指数"},"translate_title":"鲍威尔认为加息正在起作用。他说的对吗？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":0.9,".IXIC":0.9,".SPX":0.9,"XAO.AU":0.9,"XJO.AU":0.9,"XKO.AU":0.9},"content_text":"It was subtle, but Jerome Powell gave the air of someone with more command over his mandate than any time this year. The Fed chairman, however, has no control over global instability.After the embarrassment of being caught flat-footed against supply side price surges last year, Federal Reserve chairman Jerome Powell looked slightly more comfortable in his skin when he addressed the media on Wednesday (Thursday AEST).After two aggressive 0.75 percentage point interest rate rises in as many months, Powell and his colleagues have landed close to a “neutral” Fed funds rate – of between 2.25 and 2.5 per cent - where monetary settings are neither stimulatory nor constraining.From here, the Fed is likely to move to just below or above 3 per cent in September, at level at which the brakes are lightly applied to the US economy. Central banks around the world fighting similar battles with inflation will be watching closely.Fed boss Jerome Powell and RBA governor Philip Lowe are both expected to keep raising rates. David RoweWhether the next Fed rate rise is another jumbo move or a more moderate one of 50, or even 25, basis points will depend on whether headline inflation eases from the 40-year high of 9.1 per cent seen last month, and what other data around the labour market, fixed investment and other economic activity are saying.Barring further price shocks in commodities and ongoing disruption from post-pandemic supply constraints – both of which have fuelled inflation – Powell sees early signs that actual and flagged monetary tightening are starting to cool the domestic economy, and that the next couple of moves will consolidate this.“These rate hikes have been large, and they’ve come quickly, and it’s likely that their full effect has not been felt by the economy,” he said during the question and answer session in Washington on Wednesday (Thursday AEST).“The committee feels that we need to get policy to a moderately restrictive level.”From here, the main risk is that the Fed overdoes it, and chokes off growth by scaring business and consumers into seeing inflation as a permanent feature of the post-COVID-19 economy. Some believe the world’s biggest economy is already in recession, albeit a shallow one without high unemployment.As inflation expectations set into the public psyche, businesses postpone investment and hiring and consumers curtail spending. And this is why Powell on Wednesday reiterated the importance of achieving price stability, which he described as the “bedrock of sustainable economic growth”.Getting prices down, then, takes marginal priority over the central bank’s other mandate, that of protecting jobs. That Powell can afford to watch the unemployment rate climb a little from its current 3.6 per cent is a luxury afforded by one of the tightest labour markets in recent memory.“We actually think we need a period of growth below potential in order to create some slack, so that supply side can catch up,” Powell said.“We also think there will be in all likelihood some softening in the labour market conditions.”Market reaction to Powell’s comment suggests investors want to believe the “soft landing” narrative. Share prices surged, and long- and short-maturity bond yields fell, as buyers reckoned on a pivot to more moderate tightening of monetary conditions.“I think they want to believe that the economy is slowing sufficiently now to create what might be a soft landing by the first half of next year,” said David de Garis, chief economist at National Australia Bank.Powell’s main caveat, of course, is global instability and the sort of commodity price shocks that the war in Ukraine, the lingering fallout of the COVID-19 pandemic, or tension in the Asia-Pacific region have delivered, and could again. Although these are largely stripped out of core inflation readings, the Fed still has to act on headline inflation.“If you have a sustained period of supply shocks, those can actually start to undermine, or work on de-anchoring inflation expectations,” Powell admitted.Ignore or underplay the risks of these wildcard factors at your peril, says Claudia Sahm, former Federal Reserve and White House economist.“Some commentators argue that the US needs a recession to bring inflation down,” she wrote in the Financial Times this week.“That thinking hinges on a simplistic model of the economy and a refusal to see COVID and the war in Ukraine as important sources of inflation now.“The stakes are too high to rely on such a questionable approach.”","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9903341010,"gmtCreate":1658974450330,"gmtModify":1676536238180,"author":{"id":"4103860021943040","authorId":"4103860021943040","name":"ccy1122","avatar":"https://static.itradeup.com/news/562c0e01bcfc63800f64741051cd9dbe","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4103860021943040","authorIdStr":"4103860021943040"},"htmlText":"[OK]&nbsp;[OK]&nbsp;[OK]&nbsp;[Like]&nbsp;[Like]&nbsp;[Like]&nbsp;","listText":"[OK]&nbsp;[OK]&nbsp;[OK]&nbsp;[Like]&nbsp;[Like]&nbsp;[Like]&nbsp;","text":"[OK] [OK] [OK] [Like] [Like] [Like]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9903341010","repostId":2254239152,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9903340092,"gmtCreate":1658974249516,"gmtModify":1676536238094,"author":{"id":"3585604372962377","authorId":"3585604372962377","name":"patrickLai","avatar":"https://static.tigerbbs.com/baedd77ad7c3a28da1ae2ecc8b2e88aa","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"3585604372962377","authorIdStr":"3585604372962377"},"htmlText":"Raise &amp; see the death","listText":"Raise &amp; see the death","text":"Raise & see the death","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9903340092","repostId":2254239152,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9903356358,"gmtCreate":1658973896774,"gmtModify":1676536237979,"author":{"id":"4089861821723520","authorId":"4089861821723520","name":"Huhu88","avatar":"https://static.tigerbbs.com/afaf32d53dd5ce37ce49c567be9cef05","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4089861821723520","authorIdStr":"4089861821723520"},"htmlText":"Thanks","listText":"Thanks","text":"Thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9903356358","repostId":2254239152,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":44,"commentSize":3,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}