Powell summarized his speech:

1. The atmosphere at the opening was very relaxed, in sharp contrast to the previous year; details: The host’s welcome speech was very short, and Powell was joking, so I will keep it short too.

2. I gave a very brief speech last year, and it will be longer this year, but the message we want to send is the same: we will bring inflation back to 2%

3. If necessary, we will continue to raise interest rates and keep overnight interest rates at a high level until we confirm that inflation growth is slowing down.

4. PCE in June and July are welcome, but we are not sure the trend will continue

5. Divide inflation into three parts: commodity inflation has slowed down significantly, rent inflation will continue to slow down due to data delays, and the last super core inflation has seen a slowdown in growth in the past 3-6 months, which is disappointing. encourage

6. Outlook: If the economic growth rate is higher than expected, leading to a recurrence of inflation, then we may have to continue to raise interest rates. 7. We believe that interest rates are already in the restricted area, but we are not sure where the neutral interest rate is.

I predict that next month’s CPI will start to rebound at over 90%.

Explain here

Neutral interest rate = Fed overnight rate - CPI core inflation or Fed overnight rate - PCE core inflation

Then as long as it is >0.5%, it means it is above the neutral interest rate.

So before the next trend-reversing CPI arrives, Powell’s speech has reason to be on the dovish side.

Because the current real interest rate is indeed greater than the inflation data, and the unemployment rate has not increased significantly, unless the Fed changes its 2% inflation expectation to 3% one day in the future, there is reason to believe that interest rates will be cut very early ( (When there is no major crisis in a certain country)