Summary of Powell's Speech and the Federal Reserve FOMC Statement (Full Text Attached)

Interpretation of Teacher Powell's Speech

1. The main reason for inflation is not the labor market, but taxes (disruption). However, I do not care about the decisions made by the Chairman; I only judge whether to cut interest rates based on the decisions made by the Chairman. The unsustainable debt is not my concern; I have no control over it.

2. Inflation is holding up well, employment is close to its maximum level, and the economy is stable, very good, good boy;

3. Tax rates are still higher than expected, which may lead to significant long-term inflation;

4. How low does the unemployment rate need to be before interest rates are cut? I don’t know; I need to look at the actual situation in the future and weigh these two goals of inflation and employment. Which one is further away will determine the decision, and how long it takes to achieve these goals.

5. I have the capital to wait; employment is very robust, and the economy is not in recession. The -0.3% GDP in the first quarter was distorted by imports; ignore it. I will just watch how the Chairman performs;

6. It is difficult for me to make a decision before negotiations are concluded. You haven’t reached a result, so I cannot assess the actual impact on inflation; therefore, I don’t know.

7. What do you think about the significant decrease in cargo volume at Chinese ports and the potential impact of shortages on the US? What do you think about the deadlock in negotiations? Old Powell: I don’t know; it’s not my concern. I can only influence resident demand through interest rate hikes or cuts; I have no control over supply chain issues, and how to negotiate is up to the Chairman; it has nothing to do with me.

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FOMC Statement:

1. Interest Rate Decision: The benchmark interest rate will be maintained at 4.25%-4.50% with a vote of 12-0, marking the third consecutive time of holding steady.

2. Employment Outlook: The unemployment rate has stabilized, and the labor market is resilient.

3. Balance Sheet Reduction: The current pace of reducing Treasury and MBS holdings will continue.

4. Inflation Outlook: The inflation rate remains slightly high; the risks of high unemployment and high inflation have risen.

5. Economic Outlook: The uncertainty of the outlook has “further increased.” Despite the fluctuations in net exports affecting the data, economic activity continues to expand at a “robust pace.”