🤩Powell speech check ✔️

Powell speech check ✔️

the current economic situation

• Shutdowns allow some official statistics to be identified by delayed or private data
• Employment Market: Unemployment Low, but Slows Employment Growth. Reduced Employment and Economic Activity Participation Rates Reduce Labor Supply
• Inflation: Core PCE 2.9% As of August. Mainly Tariff Impact
• Short-term inflation expectations rise, long-term expectations align with 2% target.

monetary policy direction

• The recent slowdown in employment has led to an increase in employment risks.
• One step closer to policy stance neutralization at FOMC in September.
• “Depending on the economic situation, each meeting will be judged, and there is no pre-determined route. We will continue to carefully balance price stability and employment goals.”

Summary

• During the pandemic, the expansion of the balance sheet was a key means of preventing economic collapse.
• It has since shrunk quickly (QT), but financial stability has been maintained.
• The Fed’s ‘sufficient reserve system’ is effective in controlling interest rates.
• The economy is currently experiencing modest growth, low unemployment, and a gradual slowdown in inflation.
• The policy should be data-based.
• There is no predetermined path for either rate cuts or further tightening.

➡️Comment
“There is no fixed path for either rate cuts or further tightening, and we will decide carefully while looking at the data, although employment risks are increasing and we continue to keep an eye on this.” (Summary of the remarks)

The tone has not changed much from before. It remains to be seen whether the market will accept it as a disappointment or decide it has crossed the ridge due to the resolution of the issue, but the possibility of big volatility seems low

Now the market looks likely to move back to Trump vs Xi Jinping risk/// [Powell Speech Summary 2025/10/14 NABE]

1. Possible data show that tariffs are driving up price pressures.
2. For now, there is no risk-free path for monetary policy.
3. Recent data shows low employment, low layoffs.
4. The data currently available is September data
5. Future monetary policy pathways will be affected by data and risk assessments
6. Pre-shutdown data suggested growth could be better than expected.
7. Downside risk in the U.S. job market has increased.
8. There are other data available to the U.S. central bank.
9. Rising job market risks justified a rate cut in September.
10. The balance sheet is still an important monetary policy tool.
11. The Fed still aims to adjust its Treasury balance sheet over a long period of time.
12. Fed staff will discuss composition of balance sheets.