Key Points Summary of Powell's Speech on July 15th.
1. Monetary policy:
No signal will be released regarding the timing of interest rate cuts.
The lag in the effectiveness of monetary policy allows the Federal Reserve to cut rates before inflation reaches 2%.
The policy is restrictive, but not excessively so.
2. Inflation and the economy:
Recent data reinforces confidence in inflation returning towards the 2% target.
There is a possibility of inflation falling to 2% without causing pain in the job market.
The Federal Reserve has "overestimated" the speed of the normalization of the U.S. economy.
Forecasters "need to remain humble about too many companies."
3. Re-election prospects:
There will be no discussion on whether to continue serving as Federal Reserve Chair.
4. Federal Reserve independence:
The Federal Reserve should maintain its stance to protect its independence. Former Federal Reserve Chair Greenspan advised me to "prepare a pair of earmuffs"—to ignore criticisms from former U.S. President Trump and be prepared for the worst-case scenario.
5. Application of artificial intelligence:
The questions generated by ChatGPT are not as excellent as those from journalists. The Federal Reserve has used ChatGPT to create potential questions for press conferences but has not yet used it for monetary policy.
6. Debt issues:
Washington is showing more positive attitudes towards addressing U.S. debt issues.
7. Market reactions:
The U.S. 10-year Treasury bond yield briefly dropped below 4.20%, hitting a daily low, and has since risen to above 4.23%. The 2-year U.S. bond yield plummeted to a daily low of 4.4154% before rebounding and approaching 4.46%.
Spot gold briefly rose to a daily high of $2439.75 per ounce, with the increase narrowing to 0.4% approaching $2420.
The ICE U.S. Dollar Index increased by 0.13%, reaching 104.234 points; the U.S. dollar rose 0.1% against the Japanese yen, surpassing 158 yen, after briefly dropping to a daily low of 157.19 yen.
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