- The current economy is still strong, and current inflation is still high compared to the FED's long-standing target of 2%.
- The current health of the Labor Market is still good, with the unemployment rate fluctuating within a narrow range like last year (hovering around 4%).
- Regarding the current economic situation, early easing of policy does not seem favorable and with a weak labor market, the FED may ease policy when necessary (this has been heard many times this year and in the meetings at the end of last year, still nothing has changed).
FED Powell is continuing to maintain his neutral stance, and comments seem to still be geared towards waiting for upcoming data to make decisions.
- Clearly, Trump's tariffs will affect inflation (as evidenced by CPI and PPI data in January or even Retail Sales data in that same month being affected by tariffs rather than a true increase in inflation).
- It is very difficult to determine the degree of impact of tariffs on inflation, and it is still too early to determine whether to overlook the impact of tariffs on inflation.
- He will overlook if inflation data rises again in the short term (due to the impact of tariffs); however, in the long term, he does not want to see inflation actually rise again.
- The goal of bringing inflation to 2% this year will be delayed (meaning that just keeping inflation stable would be very good, he will not place too much importance on the FED's target).
This means that if inflation "self-cools," then easing (cutting interest rates) will be prioritized over tightening (keeping interest rates unchanged).
Powell confirms that forecasts of a potential Economic Recession are being raised to some extent; however, for him, the current level is not too high.
- For him, this means that the current situation of an Economic Recession is still low; it is merely a temporary fear of economic forecasters.
