Market Reaction to Powell's Latest Remarks
Recent Producer Price Index (PPI) data has been disappointing, with a core PPI monthly reading of -0.4%. Not long ago, Consumer Price Index (CPI) data provided strong support, reflecting significant progress made by the Federal Reserve in continuously suppressing inflation. These data suggest that the Personal Consumption Expenditures (PCE) index may decline further. At the time of this report, Federal Reserve Chairman Jerome Powell has begun to deliver important remarks.
What do Powell's remarks mean for the economy?
The Federal Reserve is about to announce the interest rate decision for June, expected to be released in 34 days. With concerns about an economic recession easing, the current market expectation is that there will be no rate cuts in June and July. Former President Donald Trump's stance has also influenced market sentiment, as he advocates for rate cuts. Given that inflation appears to be on a downward trend, the Fed's current interest rates seem stricter.
Will the upcoming changes affect cryptocurrency?
Yes, the Federal Reserve's cautious monetary policy stance has had a significant impact. This suggests that if the economic situation continues to evolve, there may be rapid rate cuts before the end of the year. Powell emphasized in his recent remarks that a strong framework is needed to address various economic challenges, considering the frequent and persistent supply shocks.
The Federal Reserve is reassessing its strategy (especially the strategy adopted in 2020), highlighting that the complexity of economic management is changing. Given the current economic indicators, the previous tolerance for moderate inflation overshoots has become less important.
Specific insights include:
PCE for April is expected to be around 2.2%. Officials have reached a consensus on revisiting employment-related strategic language. Ongoing supply shocks are expected to require an adaptive framework.
Powell's ongoing remarks, combined with the latest economic data, demonstrate the Fed's cautious yet flexible stance, focusing on formulating economic strategies based on changing circumstances. Financial markets are closely monitoring these remarks.
Powell's views are under close scrutiny, and their impact on monetary policy and economic forecasts, particularly on the evolving cryptocurrency market, needs to be closely watched. Stakeholders are eager to understand the broader implications of potential shifts in economic policy.