Powell's speech at the Jackson Hole annual meeting signals a policy shift, with the core points as follows:
1. Policy Shift: From 'Wait-and-See' to 'Preparing for Action'
Clearly stating for the first time that 'policy may need to be adjusted', breaking the previous tone of 'maintaining interest rates', interpreted as a prelude to interest rate cuts. Market expectations for a 25 basis point rate cut in September have significantly increased, with even bets on a 50 basis point cut emerging. Policy flexibility has strengthened, described as 'clear direction', with the countdown to the rate cut cycle beginning.
2. Inflation and Economy: Inflation is controllable, the economy is resilient but poses risks
It is believed that the impact of tariffs on inflation is short-term, with 30%-40% of core inflation coming from tariffs. Long-term inflation expectations remain anchored to a 2% target, boosting confidence in the path back to 2% inflation; the GDP growth forecast for 2025 has been lowered to 1.7%, but emphasizes that the economy remains robust, while acknowledging rising risks to employment, maintaining the 'soft landing' narrative.
3. Interest Rate Path: High probability of a rate cut in September, magnitude depends on data
A rate cut in September seems almost certain, with the magnitude depending on August inflation (to be released on August 31) and employment (to be released on September 6) data. If the data is favorable, a one-time cut of 50 basis points may occur; it was also mentioned that a review of the Federal Reserve's policy principles may be initiated before the end of the year, potentially involving adjustments to the inflation target and labor market models.
4. Market Impact: Risk assets strengthen in the short term, need to monitor subsequent data
Following the speech, U.S. stocks and bond markets surged, with Bitcoin and Ethereum rising in the short term; the dollar came under pressure, while gold and oil benefited from the increase. Caution is needed against the risk of 'buying the expectation, selling the fact', as subsequent data will determine the magnitude of the rate cut. It is advisable to pay attention to dynamic position balancing under policy uncertainty.
