The Federal Reserve sends a major signal! Powell's latest speech ignites the market—Is the 2% inflation target about to cool down?
The information from this recent seminar speech is explosive!
Let me get straight to the point:
What was actually said?
In simple terms, the Federal Reserve may "revisit old accounts"—no longer pursuing the "historical issues" of inflation exceeding targets in the past few years, but instead focusing solely on whether current inflation data meets standards. It's like your mom used to nag you about your final exam scores, and now she only looks at your monthly test scores.
What’s the harshest subtext?
The Federal Reserve is very likely to officially change the rules of the game in 2025! They will switch from the "total account" model back to the "current ledger" model. This is equivalent to loosening monetary policy.
Why did the market suddenly get excited?
As soon as the news broke, short-term US Treasury yields fell sharply. The reasoning is simple: since they are not pursuing the historical inflation surges of the past three years, there is no need to keep inflation below 2% as compensation, which is like easing the pressure!
Is the 2% target really being abandoned?
Don’t get it wrong! Powell emphasized on the spot: "The 2% red line will never change!" What changes is the assessment method—from "calculating the total over three years" to "monthly KPI assessment."
Even the Federal Reserve has realized: being obsessed with past data only leads to self-entrapment. Trading is so, and isn't life the same? When central banks start teaching us to "live in the moment," those who cry over spilled milk should wake up!
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