Main Content of FED's Monetary Meeting at 1:30 AM on July 27

Main Content of FED's Monetary Meeting at 1:30 AM on July 27

The data presented in the meetings aligns with the expectations that CPI slowed down in June, which is encouraging, but it's only a one-month data.

We have not made any decisions regarding future meetings yet.

The labor market remains tight, and job growth continues to be robust.

Powell mentioned that FOMC will take a data-dependent approach to future interest rate hikes.

The commitment is to achieve the dual mandate and bring inflation back to 2%.

Lower inflation could mean the economy is trending downwards, but core inflation remains relatively high.

A gradual increase in interest rates does not imply a rate hike at every meeting.

When assessing rate cuts, both inflation levels and the pace of decline need to be considered.

I don't think interest rates will be cut this year.

If the data is necessary, we could raise interest rates in September.

The Fed's language indicates that any questions about future rate hikes are on hold until we see upcoming data reports and the pace of inflation. However, FOMC remains determined to bring inflation down to 2%. As the labor market continues to grow, boosting demand for consumer goods, the economy will expand, and inflation will likely decrease.

Earlier, the Fed also mentioned the possibility of two more rate hikes this year. If this is true, we need to monitor the two CPI announcements before deciding whether to further increase rates in September. Additionally, we should pay close attention to core CPI, PMI, PPI, and PCE indexes.

Fed's rate hikes benefit the USD, but may create challenges for financial markets (crypto, forex, stocks). However, with the current rate at 5.25%, the market has prepared for this, and charts have not seen significant fluctuations. After the monetary meeting, the Fed has taken a neutral stance until September.

Jul 27, 2023