US Treasury Secretary Janet Yellen believes that the Fed's "last mile" in the fight against inflation is not too difficult. The market believes that this may reveal the internal thinking of the FED.
In an interview with Nick Timiraroos, a reporter known as the "FED mouthpiece" on Wall Street** (WSJ), Yellen pointed out on the 12th that inflation has indeed "cooled significantly and is expected to slow down to the Fed's default target." "Personally, I don't think the last mile of the fight against inflation is going to be bumpy," she said.
Asked what she thought about the wage-price spiral and rising inflation expectations, Yellen said, "These are at the bottom of my list of concerns."
forexlive.Adam Button, chief foreign exchange analyst at COM, pointed out on the 12th that he speculated that the Federal Open Market Committee (FOMC) should eventually agree with Yellen's view (or have long thought so). If FED Chairman Jerome Powell also revealed that the last mile of the fight against inflation is not particularly difficult when he released a speech after the monetary policy meeting on the 13th, it may trigger financial markets to celebrate** and the dollar will be sold off.
The United States announced on the 12th that the consumer price index (CPI) in November increased by 3 per year1%, in line with the estimates of economists surveyed by Dow Jones;The monthly growth rate is 01%, slightly higher than economists' estimates of flat. Core CPI growth rates excluding food and energy** are .3%, in line with market expectations.
The FOMC will announce its interest rate decision at 2 p.m. EST on the 13th, and Powell will hold a post-meeting press conference at 2:30 p.m. Before the FOMC announced its decision, the United States will also release the producer price index (PPI) for November at 8:30 a.m. EST on the 13th.
CNBC reported that Bank of America (Bank of America) American economist Michael Gapen released a research report on the 12th, pointing out that the FOMC is expected to keep interest rates unchanged for the third consecutive time on the 13th, suggesting that the Fed believes that the cycle of interest rate hikes is over.
Although Gapen said frankly that if inflation heats up in the future, it may force the Fed to raise interest rates further, but Bank of America believes that the probability of the economy cooling is higher, and the focus of the market in 2024 should be to cut interest rates rather than raise them. The upcoming post-meeting statement of the FOMC may remove the phrase "further tightening of monetary policy" and instead promise to return inflation to 2%.
In regular times, the Fed** believes that the neutral rate (the real short-term interest rate at which the U.S. economy can grow sufficiently and inflation remains stable) is close to 05%。As a result, Power recently said that interest rates have become quite restrictive into territory.
UBS economist Jonathan Pingle pointed out in a report that as inflation gradually cools, the FOMC leadership should consider cutting nominal interest rates in 2024, so that the restrictive effect of real interest rates on the economy can remain unchanged.
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