I have to write it short because I have a morning schedule… The topic is quite heavy to pass shortT.T

I remember that when I was young. It was the end of the last day. The homeroom teacher came in. He was talking so excitedly. He was talking so much without knowing that the kids came in. Well, it’s actually hard to check the relationship. First of all, I knew that he came in because I was sitting in the front row because I was short. I wonder if most of my other friends knew that. But… He was just talking. He was standing still, wondering if he was mad. And then the cool thing is that we talked like that. And he said, were you all talking? Well, you know the result. I went home late

Sometimes it happens. When you’re in a runaway situation, you’ll notice something on your own. Yes. I think the stock market, which is pushing up with excitement day after day, is also slightly wary of the situation. Money keeps rushing in, raising asset prices. I think the market trend was not the previous day, with concerns about how far this could run. Among Powell’s comments today, there are many things to note. Personally, it should be seen to what extent the Fed’s perception of the current asset market is. For your information, the Central Bank of Australia reported that it should be very cautious about lowering the benchmark interest rate by the end of the year, seeing expectations for a rate cut push up Australian housing prices again. Looking at the hot asset market to some extent, the Fed also thinks that it could make a slight change in its stance.

What’s more important than that is the comments made by the Federal Reserve Bank of Atlanta Governor Bostic, who is a dove that’s close to the centerline… He said before and after the FOMC in January that three cuts within the year would be appropriate. Governor Bostic’s comments are actually not very powerful within the Fed, but I’m going to cite a number of issues that might be a little bit of a consideration this time. I’m going to quote from the Asian Economic Daily. I’m going to cut them in paragraphs and explain them in detail… Let’s take a closer look.

“I don’t expect them to make consecutive cuts,” said Rafael Bostic, president of the Federal Reserve Bank of Atlanta, on its website on the 4th (local time). “Given the uncertainty, it is better to take action first and then look at the reaction of market participants such as companies and households.” “At the same time, I thought it would be appropriate for the Fed to cut interest rates by 0.25 percentage points twice by the end of this year.”

First of all, the media seems to be paying attention to this part of the Fed’s projection in December of last year that we had three cuts within the year. Governor Bostic, known as a pigeon, said it twice, and we’re talking about the second half of the year as a period of the first cut, and I think, oh, the interest rate cut slowly, and a little bit less? Personally, now this rhetoric doesn’t seem to work much on the market because in the end, we’re going to cut it, because what are you afraid of? Let’s continue a little bit more.

“Earlier, the Fed cut interest rates in the mid-1990s and then froze them at three meetings and then further cut them again. In this tightening cycle, the Fed has also started raising interest rates in an “elevator” style, starting in March 2022. Based on Governor Bostic’s outlook, if the Fed reverses its tightening policy this year, it is expected that a step-by-step “escalator” interest rate cut will be made. This means that if the Fed returns to its easing monetary policy, it may become difficult to predict in terms of the extent and speed of interest rate cuts.”

The escalator goes up slowly, and the elevator goes up and down fast. In the past, the Fed’s interest rate hikes went up slowly like an escalator, but when they came down, they went down like an elevator. But Governor Bostic said that the rate hikes that started in March of 22 were so sharp that they went up like an elevator. Instead, when they came down, they came down like an escalator, unlike in the past. And that’s when interest rates were cut slowly in the mid-1990s, and I’m just saying that. It’s different from the past. The timing, the breadth and the speed of the rate cuts are the opposite of what they were in the past..

“President Bostic diagnosed that companies are currently overheating, such as increasing spending and investment. In this situation, he believed that if the Fed lowers interest rates, new demand could surge and lead to inflationary pressure. “In recent weeks, I have talked to corporate decision-makers and heard about the optimism they expect,” he said. “This threat, which we call pent-up overheating, is a new upward risk that needs to be thoroughly investigated in the coming months.” (Asia Economy, 24.3.5)

Personally, I think that’s the whole point of this paragraph. So let’s use some time here. Once prices are stable. When they hit 2 percent, they’re going to have to scream, “Wow,” and they’re going to start lowering interest rates. But, by the way, Governor Bostic here uses the term suppressed overheating. I think he slightly misinterpreted Greenspan’s irrational overheating in the past. What this means is that the child is crying. So I was going to be very hard at it, and I was like, “I’ll give you candy,” and I turned my head and looked for it, and I said, “I’ll give you candy.” And then I turned around a little bit, and he’s smiling, and what does it feel like? Yes, I’m enduring it because good moments have to come, so to those who hold it in, there’s an answer to that. So the moment you give it to that candy, you’ll feel a lot of happiness.

It’s important to look at the indicators right now and move on, but let’s think about the market reaction when you give them the gift of a rate cut. It looks like a slowdown right now, but you can give them a cheer, and that could create a problem of rekindling the inflation that’s barely been contained. You have to be careful about cutting interest rates … so even if you cut interest rates … you have to keep up with the movement after the cut …

The whole point of Mr. Bostic’s comment this time is “suppressed overheating” … and if this overheating explodes at any given time, we’ll have to start fighting prices again. So let’s cut it and observe it for a while … and we’ll go like this. The escalator is going to be pretty slow. We’re going to cut down on today’s essay. Thank you.