[Highlights of the Federal Reserve FOMC statement and Powell’s press conference]

临境加密研究院 · 2023-05-04T03:08:25.000Z

Compiled by Linjing Research Institute: Overview of the highlights of the Federal Reserve’s FOMC statement and Powell’s press conference 1. Interest rate level: The decision to raise interest rates by 25 basis points as scheduled was unanimously approved by the voting committee and continue the balance sheet reduction plan; a pause in interest rate increases was discussed, but not for this meeting. 2. Banking crisis: It reiterated that the banking system is resilient and has generally improved; the outflow of deposits from major banks has stabilized, emphasizing the need to strengthen supervision. 3. Interest rate outlook: Removed language suggesting further interest rate increases; based on the Fed's inflation outlook, an interest rate cut is inappropriate; the impact of the credit crunch is difficult to determine, and in principle there is no need to raise interest rates higher; interest rates may have reached sufficient At a restrictive level, interest rate hikes may be paused.

Linjing Research Institute: Summary of the Federal Reserve FOMC Statement and Powell's Press Conference
Interest rate level: The interest rate was raised by 25 basis points as scheduled, and the decision was unanimously approved by the voting committee to continue the balance sheet reduction plan; there was discussion about suspending interest rate hikes, but not for this meeting.
Banking crisis: reaffirmed that the banking system is resilient and has improved overall; deposit outflows from large banks have stabilized, and stressed the need for stronger supervision.
Interest rate outlook: The wording suggesting further rate hikes has been deleted; based on the Fed's inflation outlook, a rate cut is inappropriate; the impact of credit tightening is difficult to determine, and in principle there is no need to raise rates higher; interest rates may have reached a sufficiently restrictive level, and perhaps rate hikes can be paused.
Economic Outlook: The U.S. economy is expected to grow at a moderate pace, but a mild recession is possible.
Inflation expectations: Inflation is still higher than the target of 2%, but it has eased. There is still a long way to go to reduce inflation, and we pay close attention to inflation risks.
Debt ceiling: The debt ceiling is a risk, but it did not have a key impact on this decision. Don't expect the Federal Reserve to support the economy in the event of a default.
Job market: Job growth is strong and unemployment remains low; there are some signs that supply and demand in the labor market are returning to a better balance. Wage growth is above the 2% inflation target, but is not the main driver of inflation.
Market reaction: As of press time, interest rate futures pricing in the Fed will no longer continue to raise interest rates and will have a standard rate cut in September, with a cumulative rate cut of 72BP to 4.35% by the end of the year; gold rose to $13 in the short term before falling back to the pre-decision level, and the Nasdaq rose to about 1% before turning down.
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