Breaking! Powell speaks out, the dollar may face extreme fluctuations! Federal Reserve officials collectively hint at 'rate cuts', what has happened?
In the current unpredictable global economic situation, every subtle fluctuation in the financial market tugs at the hearts of investors. Recently, a series of remarks from Federal Reserve officials have once again plunged the market into heightened attention and speculation.
Powell unexpectedly speaks out, warning bells for dollar fluctuations ring.
On Monday, Federal Reserve Chairman Powell delivered a speech at an important event, and his remarks were like a stone thrown into a calm lake, stirring up ripples. Powell pointed out that the Federal Reserve still needs to deeply understand the policy practices of other countries and their impact on the U.S. economy. Looking back at history, the collapse of the Bretton Woods system in the 1970s fundamentally changed the implementation of monetary policy, with exchange rate policy being primarily led by the U.S. Treasury since then. Now, policymakers must pay close attention to the potential for extreme fluctuations in the dollar, as this will have far-reaching effects on American businesses and households. Notably, Powell did not mention monetary policy or economic outlook-related content in this speech, and this 'evasive' style of speaking has made the market even more uncertain about future dollar trends.
What signal does the collective hint at 'rate cuts' from senior officials send?
On the same day that Powell spoke, several Federal Reserve officials also made speeches, leading to a heated discussion about 'rate cuts' in the financial sector.
Chicago Fed President Goolsbee stated that if trade uncertainties can be alleviated and the U.S. economic outlook is good, the Federal Reserve may continue to cut interest rates. This statement undoubtedly injected a dose of 'stimulant' into the market, causing investors' expectations for future rate cuts to surge. Goolsbee believes that an improved trade environment will provide momentum for economic growth, and in this context, appropriate rate cuts could further stimulate the economy and promote business investment and consumption.
Federal Reserve Governor Waller expressed his views from another perspective. He expects tariffs to raise inflation and unemployment rates, but even so, he still supports a rate cut within the year. Waller stated that while the impact of tariffs will drive up prices and unemployment in the short term, as long as inflation expectations remain stable, the short-term price increases should be ignored, and timely rate cuts should be taken to stabilize economic growth.
Dallas Fed President Logan emphasized that the Federal Reserve can remain patient when assessing inflation and employment risks. She pointed out that although some inflation expectation indicators have risen, the overall situation remains stable. However, Logan also warned of the need to be cautious about the long-term impact of tariffs on inflation. In her view, the effects of trade policies may take months to clarify, so the Federal Reserve needs to carefully weigh various factors when making decisions.
The market is eagerly awaiting, with the interest rate meeting as a key juncture.
Currently, the market's focus is on the Federal Reserve's interest rate meeting scheduled for mid-June. According to market predictions, the interest rate is likely to remain unchanged at this meeting, but the possibility of a rate cut may be postponed until the second half of the year. This prediction is not unfounded, as seen from the recent statements of several officials. Although some officials have signaled rate cuts, overall decisions still need to comprehensively consider various factors such as economic data, inflation levels, the job market, and trade policies.
